RealtyTrac: Flipping Activity On The Rise Again

After hitting a 14-year low in the third quarter of 2014, flips are on the rise again this year.

About 43,197 single-family homes and condos were flipped in the third quarter – a decrease of 7.0% compared with the second quarter but an increase of 18.0% compared with the third quarter of 2014, according to RealtyTrac.

About 5.0% of all home sales in the third quarter were flips compared with 5.4% in the second quarter and 4.3% in the third quarter of 2014, according to the firm's U.S. Home Flipping Report.

RealtyTrac points out that the share flips in the third quarter of 2014 hit the lowest level since the first quarter of 2000, so the dramatic year-over-year increase is a bit of an anomaly. However, it appears that flipping is on the rise again.

"After curtailing flipping activity last year due to slowing home price appreciation and shrinking inventory of flip-worthy homes, real estate investors have started to jump back on the flipping bandwagon in 2015," says Daren Blomquist, vice president of RealtyTrac. "On the acquisition side, investors are finding creative ways to pinpoint potential flips in the off-market arena, and on the disposition side, investors have a bigger pool of potential buyers thanks to a surge in Federal Housing Administration buyers this year, many of them first-time buyers looking for starter homes."

The average gross profit per home flipped in the third quarter was $62,122, down slightly from an average of $62,521 in the second quarter but up slightly from an average of $61,781 in the third quarter of 2014.

The average return on investment was 33.8%, down from 34.4% in the previous quarter but up from 32.7% in the third quarter of 2014.

States with highest share of flips as a percentage of all home and condo sales were Nevada (8.4%), Florida (7.9%), Alabama (7.5%), Arizona (6.9%) and Tennessee (6.6%).

Metropolitan areas that saw the highest shares of flips included Memphis, Tenn. (10.5%); Fresno, Calif. (9.5%); Mobile, Ala. (9.2%); Tampa, Fla. (9.1%); and Deltona-Daytona Beach-Ormond Beach, Fla. (9.0%).

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