Atlanta near top again for home flipping. Should we worry?

Atlanta is among the nation's leaders in home-flipping, according to a report released today.

The metro area ranked eighth in the country with flips accounting for 7.9 percent of sales – that is, more than one of every 13 sales — not counting foreclosure and other distressed sales, according to Trulia, a San Francisco-based real estate company.

“House flipping made a comeback in 2016, increasing for the first time in three years,” said Ralph McLaughlin, Trulia’s chief economist. “The share of home sales made up by flips last year was the most in a decade, and the third most since 2000.”

Nationally, home flipping accounted for 6.1 percent of all home sales last year, compared to 5.3 percent the year before, he said.

Trulia defines a flip as a property that sold twice during a twelve-month period, “in which both transactions are considered arm’s length,” but also, not what Trulia calls a “clearance flip,” in which there is a forced sale from a foreclosure followed by a second sale at the market rate.

Why does it matter?

Partly because it implies a rising speculation in the market, in which investors are betting more on the trend than the underlying fundamentals. It tends to happen a lot just before a market peaks – it was, as you might recall, a very popular notion just before the housing bubble burst.

Should we worry? After all, that frenzy of gold-digging, reality-television inducing activity was the clearest sign that the market was out of control and a painful correction was coming.

But McLaughlin, at least, seems optimistic.

After all, there is no epidemic of foreclosures, no tidal wave of defaults. And a house-flip may remove a home from the market and push its price up quickly – but that’s not bad when it is because the investor-owner has made improvements.

And that can be a positive thing, adding value quickly to a property, McLaughlin said.

“That … creates competition for homebuyers who may be looking to build sweat-equity on their own, but it also provides improvements to the housing stock for buyers who don’t have time or cash to improve a home themselves.”


Flippingest metro areas in the U.S.

Metro ……….. % Flips, 2016

Las Vegas, NV 10.5%

Daytona Beach, FL 9.0%

Tampa, FL 8.4%

Memphis, TN 8.2%

Fresno, CA 8.2%

Nashville, TN 8.1%

Fort Lauderdale, FL 8.0%

Atlanta 7.9%

Knoxville, TN 7.6%

Tacoma, WA 7.6%

Source: Trulia