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79 79 INVESTMENT GOVERNMENT PROPERTY PRESERVATION Journal Follow Us At: @DSNewsDaily HOME-FLIPPING BECOMING LESS LUCRATIVE According to ATTOM Data, flippers com- pleted and sold 92,422 single-family homes and condominiums in Q3 2022, representing 7.5% of all home sales, or 1 in 13 homes. is number is down from 8.2%, or 1 in 12 sales—recorded in the second quarter. On a yearly basis, it's up from 5.9%, or 1-in-17 sales. According to ATTOM, despite the decline in flipping rates during the third quarter, num- bers are still at their third-highest level in the past decade—the highest number reported was 9.7% of all homes which occurred in the first quarter of 2022. "is is a classic good news/bad news report for fix-and-flip investors," said Rick Sharga, EVP of Market Intelligence at ATTOM. "While flipping activity in the third quarter was among the highest on record, gross profits and profit margins declined significantly, reflecting the overall pricing weakness in today's housing market." And flipping rates are dropping for good reason: inflation, supply-chain issues, and in- terest rates are all eating into their gross profits, which according to the report are at their lowest point in three years. e median gross profit per flip decreased to $62,000 (a roughly 25% return) in the third quarter. is was down 18.4% from $76,000 (or 31.8% return) in the second quarter and 11.4% from $70,000 (31.8%) a year earlier. e latest profit figure stood at the lowest point since the fourth quarter of 2019, while the quarterly rate of decline marked the worst on record seen since 2009. e typical third-quarter return on invest- ment slumped to the lowest point since 2009 and was less than half the peak over the past decade of 53.1% in late 2016. Specifically, in the third quarter of 2022, the typical resale price on flipped homes declined to $310,000. at was down 5.5% from $328,000 in the second quarter of 2022, although still up 6.9% from $290,000 a year earlier. "It's apparent that fix-and-flip investors aren't immune to the shifting conditions in the housing market," Sharga noted. "With demand from buyers weakening, prices trending down over the past few months, and financing rates significantly higher than they were at the beginning of the year, flippers face a much more difficult environment today, and probably will in 2023 as well." e average time it took from purchase to resale dropped to 163 days in the third quarter, down from 166 days during the second quarter and up from 149 days a year ago. GINNIE MAE MBS PORTFOLIO CONTINUES TO GROW Ginnie Mae's mortgage-backed securities (MBS) portfolio outstanding grew to $2.325 trillion in November of 2022, including $36 billion of total MBS issuance for November, leading to $23 billion of net growth. November's new MBS issuance supports the financing of more than 122,000 households, including more than 55,600 first-time home- buyers. Approximately 69% of November MBS issuance reflects new mortgages that support home purchases, as refinance activity remained slowed due to higher mortgage rates. e November issuance includes $34.22 billion of Ginnie Mae II MBS and $1.82 billion of Gin- nie Mae I MBS, including approximately $1.71 billion in loans for multifamily housing. "Monthly issuance of Ginnie Mae MBS is returning to historic patterns, consisting of pri- marily purchase money transactions supporting tens of thousands of households in achieving first-time homeownership," Ginnie Mae EVP and COO Sam I. Valverde said. Ginnie Mae attracts global capital into the housing finance system to support homeown- ership for veterans and millions of homeowners throughout the country. e Mortgage Bankers Association's (MBA) most recent monthly Loan Monitoring Survey found the total overall number of loans currently in forbearance remained flat relative to the prior month at 0.70% as of November 30, 2022. Ginnie Mae loans in forbearance increased five basis points to 1.46% in November 2022, up from 1.41%. "ere were pockets of weakness in the November data, despite the forbearance rate remaining unchanged and the overall loan per- formance of serviced loans staying mostly flat," said Marina Walsh, CMB, MBA's VP of Indus- try Analysis. "e forbearance rate for Ginnie Mae loans increased for the fourth consecutive month, and the overall performance of the port- folio declined for the third consecutive month. Furthermore, the performance of government post-forbearance workouts also weakened." Ginnie Mae's MBS programs directly support housing finance programs administered by the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), the U.S. Department of Housing and Urban Development's (HUD) Office of Public and Indian Housing, and the U.S. Department of Agriculture's Rural Housing Service (USDA).