Home flipping drops below 5% of 2Q sales
IRVINE, Calif. – Aug. 22, 2014 – RealtyTrac's Q2 2014 U.S. Home Flipping Report finds that home flips – a same-home re-sale in less than 12 months – dropped below 5 percent.
In the second quarter, 4.6 percent of all U.S. single-family home sales were flips, down from 5.9 percent the previous quarter and 6.2 percent year-to-year. Nationwide, nearly 31,000 single-family homes were flipped in the second quarter of 2014.
Florida flips surpassed the national average. Statewide, RealtyTrac found that 6.5 percent of sales were flips, a drop from 8.2 percent the previous quarter. One year earlier, 8.5 percent of home sales were flips.
Nationwide, investors averaged a gross profit of more than $46,000 per flip in the second quarter – a 21 percent gross return on the initial investment. That's down, however from 24 percent in the first quarter and 31 percent year-to-year. The one-year-earlier number, the second quarter of 2013, was flipping's peak since the recession.
In Florida, the average gross profit on a flip was $40,962 in the second quarter, but investors made a higher profit percentage: 29.6 percent.
"Home flipping is settling back into a more historically normal pattern after a flurry of flipping during the recent run-up in home prices in 2012 and 2013," says Daren Blomquist, vice president at RealtyTrac. "Flippers no longer have the luxury of 20 to 30 percent annual price gains to pad their profits. As the market softens, successful flippers will need to focus on finding properties that they can buy at a discount and efficiently add value to."
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