House flipping, or buying and renovating a home quickly to sell it at a profit, is back in vogue this year after interest rate hikes cooled the overall housing market in 2022.
In Maine, 6.1 percent of all single-family homes and condos sold in the first three months of this year were flipped, according to a report released Thursday by the real estate data firm ATTOM. That is up 27 percent from the third quarter of last year and up 57 percent from the first quarter of last year.
The rise in flipped homes comes at a time when residences for sales are in an acute shortage across the state. Only 2,300 single-family homes were listed for sale across Maine in April, about one-third the number in 2019, according to the Maine Association of Realtors. The flips brought 225 more homes onto the market in the first quarter.
The largest numbers of new flipped homes were in Cumberland County, 56, with York adding 37, Kennebec 23, Penobscot 19, Androscoggin 17 and Oxford 14. Penobscot County had the highest annual increase, up 123 percent since the first quarter of last year. Kennebec County’s numbers rose 109 percent over the past year. Greater Portland had the most flipped homes, 97, up 44 percent since the first quarter of last year.
Profits also rose in the first quarter. Across the state, the average flipping profit was $54,575, which is the difference between the prices at which the flipper bought and sold the house. That is up almost 22 percent in the first quarter compared to the end of last year and is about the same level as flipped homes nationally. The median purchase price across the state was $250,425 and the median flipped price was $305,000.
Nationally, house flipping peaked in the first quarter of last year, accounting for 9.4 percent of the single-family homes and condos that were sold. Activity was down slightly in the first three months of this year at 9 percent of total sales, but that is still the second-highest level in a century.
Gross profits also were up, with house flippers across the U.S. getting an average of $56,000 for a home sale, or almost a 22 percent return on investment from the price they paid for it.
Those numbers represent a reversal from the nearly three years of declines, during which traditional sellers saw their sales prices and profits soar. Some of the reasons for the lower profits on flipped homes include the time and investment it takes to refurbish a home and inflation pushing up materials costs.
“The first-quarter trends offer some hope for investors indicating that brighter times may lie ahead,” Rob Barber, CEO of ATTOM, said.
