|Home Flipping Rate Matches Six Year High:
Inventory levels of homes for sale have been at or near all-time low's all year long. So, it is great news that home "flipping" is going strong. This process takes homes that are in poor shape (and out of the range of most home buyers that do not have the funds to repair the home) and puts them back into the system - all fresh and new and ready for a buyer.
ATTOM Data Solutions, released its Q1 2018 U.S. Home Flipping Report, which shows that 48,457 U.S. single family homes and condos were flipped in the first quarter of 2018.
The 48,457 homes flipped in the first quarter represented 6.9 percent of all home sales during the quarter, up from 5.9 percent in the previous quarter and unchanged from a year ago — matching the highest home flipping rate since Q1 2012.
Homes flipped in Q1 2018 sold at an average gross profit of $69,500, up from an average gross flipping profit of $68,250 in the previous quarter and up from $66,287 in Q1 2017 to the highest average gross flipping profit since ATTOM began tracking in Q1 2000.
The average gross flipping profit of $69,500 in Q1 2018 translated into an average 47.8 percent return on investment compared to the original acquisition price, down from a 48.9 percent average gross flipping ROI in Q4 2017 and down from an average gross flipping ROI of 50.3 percent in Q1 2017 to the lowest level since Q2 2015 — a nearly three-year low.
“The 2018 housing market is a double-edged sword for home flippers,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Rapidly rising home prices boosted by low available inventory of homes for sale or for rent are padding profits at the back end when flippers sell, but those same market realities are eroding flipping returns at the front end by forcing flippers to pay more to acquire homes to flip.”
Source: ATTOM Data Solutions.
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 4.50 MBS) lost -25 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly higher for the week.
Overview: We had a fairly light week for economic data and the few reports that we did get were very strong which is negative for rates. The long bond market was focused on what could come of of the G7 meeting and while there were plenty of headlines out of that meeting, there was no real action.
Jobs, Jobs, Jobs: The Job Openings and Labor Turnover Survey (JOLTS) hit 6.698M vs est of 6.40M. Plus the prior month was revised upward significantly. This is a VERY strong reading and it one of the few times where there are actually more jobs available then there are people that are unemployed.
ISM Services: The May reading hit 58.6 vs est of 57.5. The services sector represents more than 2/3 of our economic engine. This is one of the top readings in recent history.
Economic Optimism: The June IBD/TIPP Economic Optimism Index improved from 53.6 in May to 53.9 in June.
G7: The G7 meeting produced plenty of headlines and tweets but didn't produce anything else. As there was no real movement on trade/tariffs that was any different than before the G7 gathering.
What to Watch Out For This Week:
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.