A total of 207,088 U.S. single-family homes and condos were flipped in 2017, up 1% from 204,167 in 2016 to reach the highest level since 2006, according to ATTOM Data Solutions’ fourth quarter and year-end U.S. Home Flipping Report.
But the total dollar value of financed flips was even higher compared with the previous year: Flips that were financed in 2017 totaled about $16.1 billion, up 27% compared with $12.7 billion in 2016 to reach the highest level since 2007.
Flips represented 5.9% of all single-family home and condo sales during the year, up from 5.7% of all sales in 2016. It was the highest percentage of total sales since 2013.
The total number of entities (individuals and institutions) that flipped homes also increased – up 4% from 2016 to reach the highest level since 2007.
Flipped homes originally purchased by the investor with financing represented 34.8% of homes flipped in 2017, up from 31.6% in 2016 to reach the highest level since 2008 – a nine-year high.
“The surge in home flipping in the last three years is built on a more fundamentally sound foundation than the flipping frenzy that we witnessed a little more than a decade ago,” says Daren Blomquist, senior vice president at ATTOM Data Solutions, in a statement. “Flippers are behaving more rationally, as evidenced by average gross flipping returns of 50 percent over the last three years compared to average gross flipping returns of just 31 percent between 2004 and 2006 – the last time we saw more than 200,000 home flips in consecutive years. And while financing for flippers has become more readily available in recent years, 65 percent of flippers still used cash to buy homes flipped in 2017, nearly the reverse of 2004 to 2006, when 63 percent of flippers were leveraging financing to buy.”
Matt Humphrey, co-founder and CEO of LendingHome, says he is not surprised that the dollar volume and share of financed flips are hitting new highs.
“Online lenders like us exist because banks and large lenders don’t play in this space, and they aren’t using technology to be efficient, nimble and fast,” Humphrey says. “Now that investors have digital-native lenders catering to them, financing becomes an attractive alternative to cash. We predict this trend will continue because 2018 is already off to an incredible start for us.”