RealtyTrac: Home Flipping at Highest Level since 2007
RealtyTrac, Irvine, Calif., said nearly 180,000 U.S. single-family homes and condos flipped in 2015, up for the first time in four years and at the highest level since 2007.
The company’s Year-End/Q4 2015 U.S. Home Flipping Report said 179,778 homes flipped in 2015, representing 5.5 percent of all single-family/condo sales. The percentage rate increased from 5.3 percent in 2014, marking the first annual increase in the share of homes flipped following four consecutive years of decreases. The share of homes flipped in 2015 increased from the previous year in 83 of 110 U.S. metropolitan statistical areas nationwide analyzed for the report (75 percent).
“As confidence in the housing recovery spreads, more real estate investors and would-be real estate investors are hopping on the home flipping bandwagon,” said Daren Blomquist, senior vice president with RealtyTrac. “Not only is the share of home flips on the rise again, but we also see the flipping trend trickling down to smaller investors who are completing fewer flips per year.
RealtyTrac reported 110,008 investors or entities that completed at least one home flip in 2015, the highest number of home flippers since 2007, when there were 130,603 home flippers. The peak in the number of active home flippers was in 2005, with 259,192. The report noted 1.63 home flips per investor in 2015, the lowest ratio of flips per investor since 2008.
“More inexperienced home flippers with a smaller financial cushion could be a sign of an over-speculative market, but the data indicates that flippers in 2015 continued to operate within relatively conservative margins,” Blomquist said. “Homes flipped in 2015 were on average purchased at a 26 percent discount below estimated market value and re-sold by the flipper at a 5 percent premium above estimated market value.”
The report noted the 5.5 percent share of U.S. homes flipped in 2015 was still well below the peak of 8.2 percent of U.S. homes flipped in 2005. Metro areas with the biggest year-over-year increase in share of flips were Lakeland, Fla. (up 50 percent); New Haven, Conn. (up 45 percent); Jacksonville, Fla. (up 41 percent); Homosassa Springs, Fla. (up 40 percent); and Akron, Ohio (up 37 percent). The Miami metro area had the most homes flipped of any market nationwide in 2015, with 10,658, representing 8.6 percent of all Miami-area home sales for the year and up 4 percent as a share of all sales from 2014.
RealtyTrac said homes flipped in 2015 yielded an average gross profit of $55,000 nationwide, the highest average gross profit for homes flipped nationwide since 2005 ($58,750). This represented an average gross return on investment of 45.8 percent, up from 44.2 percent in 2014 and up from 35.3 percent in 2005. The annual peak in average gross flipping ROI was 2013 at 46.0 percent.
