Flipping is a quick way to turn a profit. And the last time house-flipping was hugely popular, it was a sign that the real estate market had gotten out of hand.
Photo: The Atlanta Journal-Constitution
Photo: The Atlanta Journal-Constitution

House-flipping up sharply in metro Atlanta, but nothing like bubble days (’least not yet)

Home-flipping in Atlanta is on the rise again, although it is still far from the frenzied pace of quickie-turnaround sales that preceded the peak of the housing boom and the crash that followed.

During the first quarter of this year, there were 1,225 sales that look like flips, up 18.8 percent from the previous quarter, according to a report issued this week by Attom Data Solutions, a California-based real estate research firm, formerly known as RealtyTrac.

Those apparent flips account for 6.7 percent of all sales, making Atlanta 9th-highest among the nation’s largest metro areas, according to Attom.

The median price paid for those homes $98,500

Flipping – that is, the attempt to quickly turn a profit from a home – often means an investment of sweat and cash in making improvements. Although, in extremely hot markets, where prices are rising rapidly, the improvements may be minimal.   

At best, flipping can be a very healthy part of a market, raising the value of property and buffing up run-down homes. But a surge in the practice is often an indication of an overheating market heading for trouble.

At the start of 2006, flips were 9 percent of all sales nationally – and the proportion was much higher in “bubble” markets like Las Vegas, Phoenix, Miami and Atlanta. Only months later, the market peaked and began collapsing.

A deep and painful recession followed.

(For a look at the top 20 metro areas, see below.)

In Atlanta, home-flipping also peaked in 2006, just a little later. There were 5,914 sales during the second quarter of that year. The next year, home prices peaked and started dropping and didn’t hit bottom until 2012, according to Case-Shiller’s home price index.

The number of flips at the peak of the frenzy was nearly five times the number of flips in early 2017. At the peak, flipping represented 15 percent of Atlanta sales, said Daren Blomquist, senior vice president at Attom

“The recent increase in home flipping in the Atlanta area is built on a much more solid foundation than the surge in home flipping we saw in the region about 10 years ago,” he said. “It’s not driven by risky lending that is creating false demand.”

Instead, the price hikes and flipping are driven by a shortage in the number of homes for sale – a very different problem, he said.

The national average for flipping’s share is the same now as Atlanta’s: 6.7 percent.

In five metro areas – Memphis, York, Pa., Fresno, Birmingham and Las Vegas –  flipping represents more than 10 percent of all sales. Highest is Memphis, where 15.1 percent of all sales are flips, Blomquist said.

* * * * * * * * * * * *

Real estate is a focus for AJC business coverage. As we follow the progress of the market, home-flipping is just one of the metrics we follow.

Among recent stories about the local housing market are articles about whether it makes sense to buy a home now, how Atlanta millennials are moving into buy mode, the increase in home prices and the impact of having too few homes for sale.

Those stories and many others are available for subscribers on myajc.com.

* * * * * * * * * * * *

Support real journalism. Support local journalism. Subscribe to The Atlanta Journal-Constitution today. See offers.

Your subscription to the Atlanta Journal-Constitution funds in-depth reporting and investigations that keep you informed. Thank you for supporting real journalism.

X