Fewer deals, lower profits for home flippers in Sarasota-Manatee

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The 225 flips were down by 16% compared with the first quarter of 2018

Home flippers in Southwest Florida are closing fewer deals and pocketing smaller profits this year.

In the Sarasota-Manatee region, 5.0% of home and condo sales in the first quarter were considered flips — an arms-length sale for the second time within 12 months — real estate researcher ATTOM Data Solutions reported.

The 225 flips were down by 16% compared with the first quarter of 2018.

And the flippers made less money on their deals. The median gross profit on a first-quarter flip was $50,000, down by $8,000 from a year ago.

Across Florida and nationwide, the share of flips to total home sales rose over the year, but gross profits were lower during the January-March period.

“With interest rates dropping and home-price increases starting to ease, investors may be getting out while the getting is good, before the market softens further,” said Todd Teta, chief product officer at ATTOM. “While the home flipping rate is increasing, gross profits and return on investment are starting to weaken, and the number of investors that are flipping is down 11% from last year.

“Therefore, if investors are seeing profit margins drop, they may be acting now and selling before price increases drop even more,” he said.

Sarasota-Manatee was once one of the nation’s hot spots for flipping, peaking with 1,352 such deals in the second-quarter 2005 during the real estate run up.

But the region now ranks 120th among the 138 major U.S. metro areas studied in the report, well off the ninth-place ranking it held four years ago.

Cash buyers, who played a key role in the rebound of the region’s real estate market, acquired about four out of every 10 of the flipped homes sold in the most recent quarter.

Flipped homes and condos here sold for a median $225,000. It took 205 days on average to flip a home, two weeks longer than last year.

Local investors averaged a 28.6% gross return on investment — which does not include rehab costs and other expenses — on their flips, compared with 36.0% last year.

Nationwide, the gross profit on flips was $60,000, the lowest level in three years.

Florida ranked 15th in the nation with a 7.5% share of flips to overall sales.

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