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RealtyTrac: Home flipping down to 3.7% of all sales

 

IRVINE, Calif. – May 1, 2014 — RealtyTrac's Q1 2014 U.S. Home Flipping Report finds that 3.7 percent of all U.S. single family home sales from January through March were flips – a purchase and resale in less than six months.

The percent is a drop from the previous quarter when 4.1 percent were flipped, and one year earlier in the first quarter of 2013 when 6.5 percent were flipped.

Home flippers had an average single-family home profit of $55,574 in the first quarter, minus any costs for upgrades and paperwork. That gross profit provided an unadjusted ROI (return on investment) of 30 percent of the average original purchase price. The average gross profit per flip a year ago was $51,805 for an unadjusted ROI of 28 percent.

"Slowing home price appreciation early this year in many of the most popular flipping markets put some investors in danger of flying too close to the sun," says Daren Blomquist, vice president at RealtyTrac. "But investors appear to have recalibrated their flipping strategy, accounting for the slower home price appreciation even if that means fewer flips. This is another good sign that this housing recovery is behaving much more rationally than the last housing boom, which was built largely on unfounded speculation rather than fact-based calculations."

Other 1Q report findings

″ Flips completed took an average of 101 days to complete, up from an average of 92 days in the previous quarter and 79 days in the first quarter of 2013.

″ Among metro areas with a population of at least 1 million and at least 25 single-family homes flipped, the highest shares were in New York (10.2 percent), Jacksonville, Fla., (10.0 percent), San Diego (7.1 percent), Las Vegas (6.7 percent) and Miami (5.9 percent).

″ Among metro areas with a population of at least 1 million and 25 single-family flips, those with the highest average gross ROI percentage were Pittsburgh (89 percent), Philadelphia (56 percent), Memphis (51 percent), Detroit (48 percent), and Seattle (48 percent).

″ Among those same major metros, those with the biggest increase from a year ago in home flipping were San Antonio (up 52 percent), Nashville (up 50 percent), Indianapolis (up 47 percent), Austin (up 35 percent), Providence, R.I. (up 33 percent), and Oklahoma City (up 33 percent).

″ Other major markets with year-over-year increases in flipping as a share of all sales included Los Angeles (up 1 percent), Dallas (up 28 percent), Seattle (up 19 percent), Houston (up 29 percent), and Portland (up 2 percent).

″ Among major metros, those with the biggest decrease from a year ago in home flipping as a share of all sales were New Orleans (down 83 percent), Baltimore (down 81 percent), Minneapolis (down 80 percent), Richmond, Va. (down 80 percent), Detroit (down 76 percent), and Washington, D.C. (down 73 percent).

″ Other major metros with year-over-year decreases in flipping as a share of all sales included New York (down 37 percent), Phoenix (down 39 percent), Riverside-San Bernardino in Southern California (down 22 percent), Atlanta (down 57 percent), Chicago (down 29 percent) and Las Vegas (down 9 percent).

″ Among all metro areas nationwide those with the highest volume of flips were New York (1,791), Phoenix (894), Los Angeles (828), Miami (749), and Riverside-San Bernardino in Southern California (627).

″ 82 percent of all properties flipped were sold to owner-occupants; 18 percent to buyers with a different mailing address than the property.

″ 43 percent of all properties flipped in the first quarter were all-cash sales to the new buyer.

″ 58 percent of all properties flipped were three-bedroom homes, 21 percent four-bedroom homes and 17 percent two-bedroom homes.

© 2014 Florida Realtors®

 

Related Topics: Home sales