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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 74 January 2025 J O U R N A L "When someone buys a home, they're making an investment in a prop- erty and a neighborhood, which means they'll probably see their neighbors for years to come. Many homeowners seek out positive relationships with their neighbors as a result," said Daryl Fairweather, Chief Economist at Redfin. "Renters, on the other hand, tend to stay in their homes for a shorter amount of time, which means they're often less inclined to get to know the neighbors." Considering topics like where they want their children to grow up, home- owners are frequently establishing roots. Since they won't be there for long, renters are more likely to be transient, thus they might not invest as much effort in choosing a place where they "belong." Compared to 58.1% of respon- dents who have lived in their present house for 6–10 years (including both homeowners and renters), less than half (47.6%) of respondents who have lived there for less than a year experience a sense of belonging in their area. Notably, a large percentage of respondents—21.2% of renters and 12.5% of homeowners—said they don't feel like they belong in their commu- nity. That might be a ref lection of the nation's growing social, political, and economic division. Majority of Young Homeowners Report Feeling as They Belong in Their Neighborhood Millennials and Gen Z homeowners are the most likely to feel like they belong in their area, with over two-thirds (67.6%) reporting a sense of belonging. At 44.4%, millennial and Gen Z tenants had the low- est likelihood of feeling like they belonged. Nearly two-thirds (63.7%) of millen- nial/Gen Z homeowners reported feeling they share things in common with their neighbors, making them the group most likely to say this. At 36%, Gen X renters were the least likely to claim they share characteristics with their neighbors. "Young homeowners probably feel more connected to their communities because they recently chose to live there, whereas older homeowners may be unhappy with how the neighbor- hood has changed since they first bought decades ago," Fairweather said. Baby boomer homeowners were least likely to claim they try to avoid engaging with their neighbors (24.8%), but millennial/Gen Z renters were most likely to indicate that they do so (45.7%). U.S. HOME FLIPPING DECLINES IN Q3 A TTOM has released its Q3 2024 U.S. Home Flipping Report showing that 74,618 single-fam- ily homes and condominiums in the U.S. were flipped in Q3 2024—representing 7.2%, or one of every 14 home sales, nationwide during the months of July through September of 2024. The latest portion of flipped proper- ties was down from 7.6% of all sales in the United States during Q2 2024, extending a common pattern seen during annual spring and summer 2024 buying seasons when other types of home sales spike. The flipping rate returned to the 7.2% level recorded in Q3 of last year. While the flipping rate followed historical trends, profits turned back downward for investors who buy, renovate, and quickly resell homes following a period when their fortunes had been improving. In Q3, home f lipping generated on average a 28.7% return-on-investment (ROI) before expenses on homes re-sold during Q3 2024—down from 31.2% in Q2 2024 after six straight quarterly increases that had signaled a marked improvement for the f lipping industry. The typical profit margin on homes f lipped during Q3 2024—based on the difference between the median purchase and median resale price for home f lips—slid down to only half of the mid-50% peak hit in 2016. It also stayed within a range that could easily be wiped out by carrying costs that include renovation expenses, mortgage payments, and property taxes, expos- ing again the struggles that U.S. home f lippers are having in turning healthy profits. Gross profits on typical f lips around the country decreased to ap- proximately $70,000—down roughly $5,000 from Q2 2024, and $10,000 from highs reached two years ago, although still up slightly from Q3 2023. "Home flippers just can't seem to shake the doldrums. After more than a year when things were getting better, they turned notably worse again over the summer," said Rob Barber, CEO of ATTOM. "One quarter's worth of numbers isn't enough to make any grand statements about another downturn. The next six months should speak more to that, especially amid an ongoing tight housing market that should work in their favor. But as interest rates remain double what they were a few years ago and inflation keeps raising renovation costs, investors continue to have a tough time making the kind of profits that would lure more into the game." Home-Flipping Rates Dip Quarterly Home f lips as a portion of all home sales decreased from Q2 to Q3 2024 in 115 of the 183 metropolitan statistical areas (MSAs) around the United States with enough data to analyze (62.8%), although they were still up annually in 95, or 51.9% of those markets. Measured against the same period of 2023, a ma- jority of f lipping rates changed by less than one percentage point. Among the metro areas analyzed, the largest f lipping rates during Q3 2024 were found in: • Warner Robins, Georgia (f lips com- prised 22.7% of all home sales) • Macon, Georgia (16.8%) • Atlanta, Georgia (13.6%) • Columbus, Georgia (12.8%) • Memphis, Tennessee (12.7%) Tracking Historical Flipping Trends Aside from Atlanta and Memphis, the highest Q3 f lipping rates among metro areas with a population of at least one million were reported in: • Birmingham, Alabama (11%)