Following a national trend, house flipping has slowed in Southwest Florida. 

The slowdown could help buyers, sellers and the housing market. 

“It’s an excellent sign of a rational market,” said Denny Grimes, with Denny Grimes & Co., in Fort Myers.

So just how much has flipping slowed in the region? By double digits.

According to the latest report by ATTOM Data Solutions, the Cape Coral-Fort Myers metro saw 944 homes flipped in 2018, representing 4.5 percent of total sales in the market. The area’s percentage — or flipping rate — fell 15.2 percent over the year.

The Naples-Marco Island-Immokalee metro saw an even bigger change in activity from 2017 to 2018. The area saw 346 flips last year, equating to 3.3 percent of total sales. The rate declined 17.4 percent over the year

Flippers are looking to purchase, fix up and resell homes as quickly as possible for a nice profit (like those seen on HGTV).

The ATTOM report counts homes that are purchased and resold within a year.

The slowdown in flipping activity is much more dramatic when compared to five years ago.

Since 2013 the flipping rate has fallen 46 percent in Cape Coral-Fort Myers. In Naples-Marco Island-Immokalee, the drop is slightly less — closer to 45 percent.

The decline, in part, reflects fewer foreclosures and distressed homes in the market that can be had for cheap. 

Also, the upward pressure on home prices has subsided in the region, making it more challenging for flippers to avoid becoming floppers.

“When you take appreciation out of the equation, that means you have to buy right, not sell right. The risk is much greater,” Grimes said.  

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Professionals are ‘still looking’

While Grimes said he doesn’t see as many flippers in Southwest Florida, there are still plenty of professional investors looking to buy homes they can turn around for a profit.  

“The professionals are still looking, just the weekend warriors are not,” Grimes said.

Now it’s a full-time job to find the right house to invest in, and weekend warriors don’t have the time to do the research required to maximize their profits and minimize their risks, he added.

“It’s kind of like going to a frat party,” Grimes said. “It’s fun for the first couple of hours, but the longer they stay at the party, the bigger the price they will pay the next day.”

Realtor Heather Caine, with Caine Premier Properties in Naples, said she’s still in the flipping business, but she admits finding the right homes isn’t easy.

“It’s extremely competitive when it comes to flipping, and a lot of that is because the market is so strong,” she said.

So what does she do to compete? 

“You have to get a lot more creative in how you are finding properties,” she said. “You have to be a strong negotiator and have strong negotiation skills.” 

Successful flips can be good for both sellers and buyers, Caine said, putting more turnkey homes in the market and boosting home values in their neighborhoods.

“The less distressed homes in a neighborhood is positive for sellers,” she said. “The seller wants everything in their neighborhood to be sold at the highest price possible.” 

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Some ZIP codes buck the trend

Despite the overall slowdown, some ZIP codes in Southwest Florida saw their flipping rates increase from 2017 to 2018, including ones in Naples, Estero, Bonita Springs, Cape Coral and Fort Myers. With 26 flips, the 33928 ZIP code in Estero, for example, saw its rate increase 50 percent over the year.

ATTOM’s report shows that 207,957 single-family homes and condos were flipped across the country in 2018. That was down 4 percent from 216,537 in 2017.

In 2018 house flips represented 5.6 percent of all single-family home and condo sales in the United States — the same as in 2017, but up from 5.1 percent of all sales in 2008.

In a news release, Todd Teta, ATTOM’s chief product officer, said: “With mortgage rates remaining strong and people staying in their homes longer, we have started to see a bit of a flipping rate slowdown. However, this isn’t to say home flipping is going away.”

Bargains still await investors, he said, especially in the lowest-priced areas of the country, where levels of financial distress remain highest. 

The Naples-Marco Island-Immokalee metro saw the most flips in 2005 before the market boom went bust — at 2,258. Cape Coral-Fort Myers hit its peak the same year with 5,704.

“Back in 2005, we saw a lot of flipping where a person would purchase a property and put it right back on the market at a higher price without improving the property. I don’t see as much of that anymore,” said Mike Hughes, vice president for Downing-Frye Realty in Naples, in an email. 

Occasionally, what he does see is an investor who purchases a property, fixes it up and then resells it at a higher price.

“The higher price would be justified, in many cases, because of the improvements that were put into the property,” Hughes said.

Mostly, he sees buyers who want to keep the homes they’ve purchased for years to come. 

“We are seeing more end users,” Hughes said. “I think part of this end user increase is attributable to the baby boomer generation discovering paradise as they come up on their retirement years.”

That situation doesn’t apply to all markets.

Among the more than 50 metros analyzed in ATTOM’s report, those with the highest home flipping rates in 2018 were: Memphis, Tennessee (11.7 percent); Phoenix, Arizona (9.1 percent); Las Vegas, Nevada (8.7 percent); Tampa-St. Petersburg, Florida (8.2 percent); and Birmingham, Alabama (7.6 percent).

Last year, flippers grossed an average profit of $65,000 nationally. The average return rate declined to 44.8 percent, down from more than 50 percent in 2017.

In the Naples-Marco Island-Immokalee metro, the median price for a flipped home was $330,000 last year. The selling price was markedly less in Cape Coral-Fort Myers — at $197,750.

Flippers in the Naples area made an average of $58,250 in 2018, down from $70,000 in 2017. In the Cape Coral area they netted an average of $67,250 last year, up from $55,000 a year ago.

In 2018, it took an average of 208 days to flip a house in the Naples area, while it took just a few less in the Cape Coral-Fort Myers metro — at 200.