Daily Real Estate News | Thursday, August 06, 2015
The percentage of homes being flipped by investors fell to 4.5 percent of all single-family home sales in the second quarter, despite an increase in average flipping returns, according to RealtyTrac’s Second Quarter 2015 U.S. Home Flipping Report. The report shows that 30,013 single-family homes were flipped – sold for a second time within a 12-month period.
Read more: Housing Flips Slip to Lowest Level in Years
RealtyTrac reports that the average gross profit – which is the difference between the purchase price and flipped price (excluding rehab costs and other expenses) – for completed flips in the second quarter was $70,696, an increase from $49,842 a year ago.
“Despite the rise in flipping returns in the second quarter, home flippers should proceed with caution in the next six to 12 months as home price appreciation slows and a possible interest rate increase could shrink the pool of prospective buyers for fix-and-flip homes,” says Daren Blomquist, vice president at RealtyTrac. “While average flipping returns are up substantially from a year ago at the national level and in moderately-priced markets such as Miami, Atlanta, Phoenix, and Minneapolis, flipping returns are softening in some of the higher-priced markets such as San Francisco, Seattle, Denver and Los Angeles. The fewer foreclosure deals and longer flipping timelines that we see in the data demonstrate that flippers are getting squeezed on both sides of the profit equation. Experienced flippers will often need to enter into higher-risk markets with less solid economic fundamentals to chase better yields. Flipping is not always profitable, as evidenced by the fact that flips on low-end homes priced below $50,000 actually yielded negative returns in the second quarter.”
Flipped homes took an average of 179 days to complete, as measured between the first and second purchases, according to RealtyTrac. That is up slightly from 175 days a year ago and is at the longest time for any quarter dating back to the second quarter of 2007.
According to RealtyTrac, the following markets had the highest percentage of flips of all home sales in the second quarter were in:
Fernley, Nev.: 11.4%
Miami: 9.6%
Palm Coast, Fla.: 9.2%
Memphis, Tenn.: 9%
Tampa, Fla.: 8.9%
Deltona, Fla.: 8.7%
Sarasota, Fla.: 8.1%
The metros with the highest average returns on flipped homes in the second quarter were in Chicago; Dayton, Ohio; Harrisburg, Pa.; Ocala, Fla.; and Baltimore, Md.
Source: RealtyTrac