Flipping up 114% in the United States since 2011, new data shows
Flipping, where a home is bought and sold again within six months, is on the increase in the United States with the latest data showing the practice up 16% in 2013 compared with the previous year.
The figures from property data company RealtyTrac, also show that it is up 114% since 2011and homes flipped in 2013 accounted for 4.6% of all US single family home sales during the year, up from 4.2% in 2012 and up from 2.6% in 2011.
Flips accounted for 3.8% of all sales in the fourth quarter, down slightly from 3.9% of all sales in the third quarter and down from 7.1% of all sales in the fourth quarter of 2012, the highest percentage of sales represented by flips in a single quarter since RealtyTrac began tracking flipping data in the first quarter of 2011.
The average gross profit for a home flip, that is the difference between the flipped price and the price the flipper purchased the property for, was $58,081 for all homes flipped in 2013, up from an average gross profit of $45,759 in 2012. The average gross profit for homes flipped in the fourth quarter was $62,761, up from $52,746 in the fourth quarter of 2012.
The report also shows the biggest increases in flipping nationwide occurred on homes with a flipped price of $400,000 or more. Although flipping increased across all price ranges, flips on homes with a flipped sale price above $400,000 increased 36% from 2012, while flips on homes with a flipped sale price at or below $400,000 increased 17% from 2012.
The average time to complete a flip nationwide was 84 days in 2013, down from 86 days in 2012 and down from 100 days in 2011.
‘Strong home price appreciation in many markets boosted profits for flippers in 2013 despite a shrinking inventory of lower priced foreclosure homes to purchase,’ said Daren Blomquist, vice president of RealtyTrac.
‘For the year 21% of all properties flipped were purchased out of foreclosure, but that is down from 27% in 2012 and 32% in 2011. Meanwhile flipped homes were still purchased at an average discount of 13% below market value in 2013, the same average discount as 2012, indicating that investors are finding discounted buying opportunities outside of the public foreclosure process, particularly in those markets with the biggest increases in flipping for the year,’ he explained.
Major metro areas with big increases in home flipping in 2013 compared to 2012 included Virginia Beach up 141%, Jacksonville in Florida up 92%, Baltimore up 88%, Atlanta up 79%, Richmond in Virginia up 57%, Washington, D.C. up 52% and Detroit up 51%.
Major markets with big decreases in home flipping in 2013 compared to 2012 included Philadelphia down 43%, Phoenix down 32%, Tampa and Houston both down 17%, Denver down 15%, Minneapolis down 9% and Sacramento down 5%.
‘Investors have not lost interest in purchasing and flipping homes. In fact, now that we are seeing home price appreciation they are more interested than ever,’ said Sheldon Detrick, chief executive officer of Prudential Detrick/Alliance Realty with offices in Oklahoma City and Tulsa.
New Hampshire home prices did not depreciate as much as other sections of the country, so the area did not experienced a tremendous amount of distressed inventory, which makes it difficult for people to find inexpensive properties they can flip, according to Steve McGuire, vice president of business development at Berkshire Hathaway HomeServices Verani Realty.
‘When considering whether or not to flip a home it’s also important to note that house flipping is not for the faint of heart, because there are so many variables that could affect the sales transaction, price and profit,’ he said.
The Denver housing market is still experiencing record low inventory levels, which causes the best potential flip properties to be few and far between, according to Chad Ochsner, owner of RE/MAX Alliance.