ATTOM: Home Flipping Reaches 10-Year High

ATTOM Data Solutions, Irvine, Calif., said home flipping activity reached a 10-year high in 2016.

The company’s 2016 Year-End U.S. Home Flipping Report said 193,009 single family homes and condos flipped (defined as sold in an arms-length transfer for the second time within a 12-month period) in 2016, up by 3.1 percent from 2015 to the highest level since 2006 (276,067). Other report highlights:

–Home flips in 2016 accounted for 5.7 percent of all single family home and condos sales, up from 5.5 percent in 2015 to a three-year high but still well below the peak in 2005, when 338,207 were flipped, representing 8.2 percent of all sales.

–126,256 entities, including both individuals and institutions, flipped homes in 2016, up less than 1 percent from 2015 to the highest number since 2007 (143,266).

–The share of flipped homes purchased by the flipper with financing increased to an eight-year high of 31.5 percent in 2016, while the median age of homes flipped increased to 37 years, a new high going back to 2000. The median square footage of homes flipped decreased to 1,422, a new record low going back to 2000.

–The combination of more home flips and a greater share of financing for flip purchases resulted in a 19 percent jump in the estimated dollar volume of financing for home flip purchases, up to $12.2 billion for the flips completed in 2016, a nine-year high.

“Home flipping was hot in 2016, fueled by low inventory of homes in sellable or rentable condition along with a flood of capital–both foreign and domestic–searching for the returns and stability available with U.S. real estate,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.

Other report highlights:

–Homes flipped in 2016 sold for a median price of $189,900, a gross flipping profit of $62,624 above the median purchase price of $127,276 and representing a gross flipping return on investment of 49.2 percent. Both the gross flipping dollar amount and ROI reached new highs.

–Among 117 metropolitan statistical areas with at least 250 home flips in 2016, 11 had an average gross flipping profit of $100,000 or more in 2016: San Jose, Calif. ($145,750); Boston ($140,000); San Francisco ($140,000); New York ($127,250); Los Angeles ($127,000); San Diego ($111,000); Oxnard-Thousand Oaks-Ventura, Calif. ($105,000); Seattle ($102,000); Vallejo-Fairfield, Calif. ($101,000); Baltimore ($100,500); and Washington, D.C. ($100,000).

–Metros with the highest gross flipping ROI were East Stroudsburg, Pa. (241.5 percent); Pittsburgh (130.0 percent); Cleveland (116.2 percent); Philadelphia (107.1 percent); Toledo, Ohio (102.0 percent); and New Orleans (101.2 percent).

–Metros with the highest home flipping rate as a percentage of all home sales were Memphis, Tenn. (11.7 percent); Clarksville, Tenn. (10.1 percent); Visalia-Porterville, Calif. (10.1 percent); Tampa-St. Petersburg, Fla. (9.9 percent); and Deltona-Daytona Beach-Ormond Beach, Fla. (9.9 percent).

–Metros with the biggest year-over-year increase in the home flipping rate were Reading, Pa. (38.8 percent); Lincoln, Neb. (38.6 percent); East Stroudsburg, Pa. (36.6 percent); Rochester, N.Y. (31.8 percent); and Allentown, Pa. (29.3 percent).

“Investors in search of flipping returns are increasingly willing to move to secondary and tertiary housing markets and neighborhoods with older, smaller properties that are available at a deeper discount,” Blomquist said. “Given that many of these markets are more affordable, we are also seeing a higher share of the flipped homes sold to FHA buyers.”