It seems that it’s starting again. With the uptick in the Atlanta housing market, the “house flipper” may have emerged from the dust and smoke of the market collapse to re-enter Atlanta’s battle for housing supremacy.
REALTYTRAC’s first-quarter Atlanta data showed a flip blip in its data radar. Flip homes are those sold one month, then resold two to six months later at a higher price. REALTYTRAC’S data showed such houses, on average, selling for $96,496, then flipped at $139,969.
But buyer beware. These days, “flipping” could be a statistical anomaly. When you drill down into the core, you get a much more defined picture of the true market and impending housing war ahead.
The flippers of 2003 to 2006 were small investors snapping up a home at one price, pouring money into the house — sometimes just lipstick on a pig — then selling their diamond at a $30,000 to $50,000 profit.
The rising tide of inflated home prices and rampant appreciation covered all traces of what lay beneath. The urban legend of ordinary folks making killer profits was glamorized and ripe for prime time reality TV shows like “Flip this House,” “Property Brothers” and “Flipping Out.”
This time, it’s different. With a metro Atlanta single-family home supply at 17,000 homes or a 3.9-month supply, demand is quickly outpacing supply. Atlanta’s population growth is unabated. Housing is in such short demand that the pendulum has quickly shifted from flush to scarce in a span of 21 months.
A large part of the recovery swing was the entry of national single-family home aggregators as major buyers — Blackstone/Invitation Homes, Colony American Homes, Five Ten Capital and Key Property. They bought and are now institutionalizing a new real estate product class called “single-family rentals.” As much as 25 percent of the sold inventory over the last three years may have moved to their real estate corner.
The REALTYTRAC data in part can be attributed to this voracious appetite for housing. With the dramatic drop in inventory, the aggregators’ scouts are scraping the bottom for houses that have been overlooked, outbidding traditional buyers, rehabbing, then flipping them to larger institutional players for their expanded rental pools.
As the market tilts forward and the remaining Atlanta inventory evaporates, expect hand-to-hand combat for home purchases. There are too many buyers and far too few homes to buy. The traditional family purchasers will have to claw and scratch their way in between the aggregator buyer vying for the best homes in the neighborhood.
We know of one Gwinnett County home that had 19 offers in 48 hours of going on the market, ultimately selling $12,000 more than its asking price — a 21st century Battle for Atlanta.
To the victor belongs the spoils.
Frank Norton Jr. is CEO and chairman of the Norton Agency.
