Share of U.S. Homes Flipped in Third Quarter Increases 18 Percent From a Year Ago

85 Percent of Local Markets Post Annual Increase in Flipping Activity;
Memphis, Fresno, Mobile, Tampa, Daytona Beach, Las Vegas With Highest Flip Share; 
Best Markets For Flipping to Millennnials, Baby Boomers Identified

IRVINE, Calif. – Oct. 29, 2015 — RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its Q3 2015 U.S. Home Flipping Report, which shows that 43,197 single family homes and condos were flipped — sold as part of an arms-length sale for the second time within a 12-month period — in the third quarter of 2015, 5.0 percent of all single family home and condo sales during the quarter.

The 5.0 percent share in the third quarter was down 7 percent from a 5.4 percent share in the second quarter but up 18 percent from a 4.3 percent share in the third quarter of 2014 — when the share of U.S. homes flipped hit the lowest quarterly level going back to the first quarter of 2000, the earliest RealtyTrac has data on flipped homes.

“After curtailing flipping activity last year due to slowing home price appreciation and shrinking inventory of flip-worthy homes, real estate investors have started to jump back on the flipping bandwagon in 2015,” said Daren Blomquist, vice president at RealtyTrac. “On the acquisition side, investors are finding creative ways to pinpoint potential flips in the off-market arena, and on the disposition side investors have a bigger pool of potential buyers thanks to a surge in FHA buyers this year, many of them first-time buyers looking for starter homes.”

The average gross flipping profit — the difference between the purchase price and the flipped price (not including rehab costs and other expenses incurred, which flipping experts estimate typically run between 20 percent and 33 percent of the property’s after repair value) — was $62,122 for completed home flips in the third quarter. That was down slightly from an average gross flipping profit of $62,521 in the second quarter but up slightly from an average gross flipping profit of $61,781 in the third quarter of 2014.

The average gross return on investment (ROI) — the average gross profit as a percentage of the average original purchase price — was 33.8 percent for completed home flips in the third quarter, down from 34.4 percent in the previous quarter but up from 32.7 percent in the third quarter of 2014.

Best counties for flipping to millennials

Using data from the third quarter flipping report and U.S. Census demographic data, RealtyTrac identified 18 counties where the average gross return on a flipped home in the third quarter was at least 30 percent and where the millennial share of the population in 2013 (defined as those between the ages of 20 and 34 in 2013) was at least 25 percent and increased during the housing downturn between 2008 and 2013.

The top five counties for flipping to millennials were Philadelphia County, Pennsylvania, Saint Louis City, Missouri, Baltimore City, Maryland, Cumberland County, North Carolina — in the Fayetteville area — and Kings County, New York — Brooklyn. All five of these counties had average gross flipping profits in the third quarter of 63 percent or more.

County, State  Q3 2015 Home Flips Pct of Total Sales Q3 2015 Flipping Avg Gross Profit Q3 2015 Avg Gross ROI 2013 Millennial Population Share Change in Millennial Share from 2008
Philadelphia, Pennsylvania 425 8.0%  $           47,909 72.0% 26.1 19%
Saint Louis City, Missouri 77 7.4%  $           33,894 70.9% 27.2 32%
Baltimore City, Maryland 175 8.1%  $           45,083 63.5% 26.1 15%
Cumberland, North Carolina 51 6.2%  $           44,967 63.3% 25.9 12%
Kings, New York 20 1.9%  $          238,412 62.7% 25.0 16%
Newport News City, Virginia 48 8.4%  $           70,626 61.7% 25.4 18%
Montgomery, Tennessee 81 8.4%  $           53,206 61.2% 27.3 23%
District Of Columbia, District of Columbia 118 6.7%  $          227,117 55.9% 31.1 23%
Onslow, North Carolina 30 4.7%  $           44,140 52.4% 35.2 12%
Davidson, Tennessee 278 7.5%  $           69,880 51.8% 26.7 37%
Alexandria City, Virginia 24 3.6%  $          172,862 49.2% 29.9 86%
Richmond City, Virginia 56 9.1%  $           56,764 46.6% 30.5 28%
Leon, Florida 49 4.4%  $           48,346 45.5% 31.0 2%
Durham, North Carolina 59 4.9%  $           56,311 42.8% 26.4 20%
Multnomah, Oregon 228 6.0%  $           93,865 41.0% 25.6 32%
Franklin, Ohio 263 4.4%  $           40,978 39.9% 25.2 16%
San Francisco, California 37 3.0%  $          351,041 38.3% 28.5 62%
Denver, Colorado 238 6.0%  $           89,742 33.5% 28.5 47%

“With our inventory challenges, especially during the first three quarters, it is a challenge for any investor to find a good flip opportunity in the Denver area,” said Heidi Greer, broker at RE/MAX Alliance, covering the Denver market in Colorado.  “Most agents who work with investors are helping them find more long term rental property investments, as our current market is much stronger for an investor looking for rental property.”

Best markets for flipping to baby boomers

RealtyTrac identified 15 counties where the average gross return on a flipped home in the third quarter was at least 30 percent and where the baby boomer share of the population in 2013 (defined as those between the ages of 49 and 67 in 2013) was at least 25 percent and increased between 2008 and 2013.

The top five counties for flipping to boomers were all in Florida: Charlotte and Hernando counties in southwest Florida, and Volusia, Brevard and Marion counties in central Florida. The only counties outside of Florida on the top 15 list for flipping to boomers were Skagit County, Washington between Seattle and Vancouver; Sussex County, Delaware, on the Atlantic Coast between Washington, D.C. and Philadelphia;and Henderson County, North Carolina in the Asheville metro area.

County, State  Q3 2015 Home Flips Pct of Total Sales Q3 2015 Flipping Avg Gross Profit Q3 2015 Avg Gross ROI 2013 Boomer Population Share Change in Boomer Share from 2008
Charlotte, Florida 87 7.0%  $           57,579 61.3% 30.2 18%
Volusia, Florida 290 8.9%  $           44,417 52.0% 26.7 6%
Hernando, Florida 93 8.7%  $           37,856 49.5% 26.5 20%
Brevard, Florida 312 8.0%  $           50,102 48.9% 27.2 2%
Marion, Florida 111 7.2%  $           33,276 48.6% 26.1 19%
Pasco, Florida 308 9.6%  $           31,468 45.4% 25.0 8%
Sarasota, Florida 316 9.2%  $           56,962 42.4% 28.1 11%
Skagit, Washington 17 2.9%  $           75,170 41.9% 25.1 2%
Citrus, Florida 66 7.2%  $           28,232 41.5% 29.9 26%
Manatee, Florida 160 7.3%  $           57,442 39.4% 25.8 8%
Sussex, Delaware 14 2.0%  $           62,333 38.6% 27.8 14%
Indian River, Florida 96 8.3%  $           36,970 37.5% 26.6 14%
Lee, Florida 421 7.9%  $           48,281 34.7% 26.0 12%
Martin, Florida 53 5.1%  $           49,094 34.0% 27.6 8%
Henderson, North Carolina 22 4.1%  $           50,567 30.9% 26.3 8%

State, metros and zip codes with highest share of flipped homes

States with highest share of home flipping as a percentage of all single family home and condo sales were Nevada (8.4 percent), Florida (7.9 percent), Alabama (7.5 percent), Arizona (6.9 percent), and Tennessee (6.6 percent).

Among 101 markets with at least 75 single family and condo flips completed in the third quarter, those  with highest share of flipping were Memphis (10.5 percent), Fresno (9.5 percent), Mobile, Alabama (9.2 percent), Tampa (9.1 percent) and Deltona-Daytona Beach-Ormond Beach, Florida (9.0 percent).

Other major markets where the share of flipped homes were above the national average in the third quarter included Las Vegas (8.7 percent), Miami (8.6 percent), Jacksonville, Florida (7.6 percent), Baltimore (7.4 percent), Birmingham, Alabama (7.4 percent), Phoenix (7.3 percent), Orlando (7.2 percent), New Orleans (6.9 percent), Virginia Beach (6.8 percent), and Riverside-San Bernardino in Southern California (6.5 percent).

“We are seeing the capitalistic market working well in South Florida with everyone winning,” said Mike Pappas, CEO and president of the Keyes Company, covering the South Florida real estate market. “The flipper is providing updated, improved inventory that is desirable to buyers.”

Among zip codes with at least 10 single family home and condo flips completed in the third quarter, those with the highest share of flipping were 33056 in Opa Locka, Florida in the Miami metro area (30.0 percent), 38128 in Memphis (29.5 percent), 63137 in Saint Louis (28.6 percent), 33054 in Opa Locka, Florida (27.8 percent), and 44128 in Cleveland (27.5 percent).

“As equity has continued to rise across the housing stock throughout Ohio, lender confidence has contributed to an increase in funding for flipping of investment properties. While favorable market conditions have led to an increased number of flipped properties throughout the year, increased regulations and government compliance have contributed to added days within the investment property flip cycle, creating added risk and expense, and lessening potential profits for many investors,” said Michael Mahon, president at HER Realtors, covering the Cincinnati, Dayton and Columbus markets in Ohio. “The best opportunity for success in flipping properties involves knowledge and experience of the local market conditions, best provided by consulting a realtor early in the housing investment process.”

Other zip codes in the top 20 for highest share of flipped homes included zip codes in the Baltimore, Riverside-San Bernardino, Detroit, Tampa, Phoenix, Washington, D.C., and Los Angeles metro areas.

Top 20 Zip Codes for Home Flipping Share Q3 2015

 

Zip Code City County State  Q3 2015 Home Flips Pct of Total Sales YoY Pct Change  Q3 2015 Avg Days to Flip  Q3 2015 Flipping Avg Gross Profit Q3 2015 Avg Gross ROI
33056 Opa Locka Miami-Dade Florida 39 30.0% 30.7% 156  $                59,492 55.8%
38128 Memphis Shelby Tennessee 59 29.5% 74.5% 98  $                38,493 73.2%
63137 Saint Louis Saint Louis Missouri 16 28.6% 368.6% 115  $                  2,665 5.1%
33054 Opa Locka Miami-Dade Florida 25 27.8% 62.0% 136  $                43,989 52.3%
44128 Cleveland Cuyahoga Ohio 11 27.5% 220.8% 66  $                12,014 39.2%
21207 Gwynn Oak Baltimore Maryland 32 27.1% 108.6% 209  $                96,754 97.8%
92411 San Bernardino San Bernardino California 15 26.8% 48.5% 176  $                85,000 74.2%
48141 Inkster Wayne Michigan 17 26.2% 2.7% 166  $                13,024 31.9%
38118 Memphis Shelby Tennessee 33 25.4% 67.2% 100  $                31,991 82.9%
33610 Tampa Hillsborough Florida 36 25.2% 25.9% 109  $                13,216 16.5%
38116 Memphis Shelby Tennessee 20 25.0% 84.1% 159  $                30,809 52.9%
33147 Miami Miami-Dade Florida 27 24.8% 80.0% 128  $                51,921 56.3%
85031 Phoenix Maricopa Arizona 30 24.0% 89.3% 144  $                50,570 62.4%
38141 Memphis Shelby Tennessee 26 23.9% -2.2% 87  $                33,090 58.3%
20743 Capitol Heights Prince George’s County Maryland 18 23.7% 76.3% 160  $                49,323 39.7%
35127 Pleasant Grove Jefferson Alabama 13 23.6% 148.2% 146  $                30,011 44.6%
38115 Memphis Shelby Tennessee 21 23.6% 34.2% 112  $                29,508 46.7%
48342 Pontiac Oakland Michigan 16 23.5% 288.2% 136  $                  3,200 6.2%
90043 Los Angeles Los Angeles California 21 23.3% -7.8% 195  $              205,875 54.1%
33168 Miami Miami-Dade Florida 17 22.7% 56.6% 182  $                87,367 93.0%

Markets with the highest average returns on flipped homes

States with the highest average gross flipping ROI on completed property flips in the third quarter were Pennsylvania (57.2 percent), Illinois (54.0 percent), Maryland (53.6 percent), Rhode Island (48.1 percent), and Louisiana (47.9 percent). The District of Columbia also posted a high average gross flipping ROI of 55.9 percent in the third quarter

Among 101 markets with at least 75 single family and condo flips in the third quarter, those with the highest average gross flipping ROI were Pittsburgh (78.4 percent), New Orleans (73.1 percent), York, Pennsylvania (64.5 percent), Punta Gorda, Florida (61.3 percent), and Clarksville, Tennessee (59.6 percent).

Among zip codes with at least 10 completed flips in the third quarter with home price data available, those with the highest average gross flipping ROI were 21229 in Baltimore (136.0 percent) and 33063 in Tampa (130.2 percent), along with three Chicago-area zip codes: 60652 in the city of Chicago (120.4 percent), 60402 in the city of Berwyn (120.3 percent), and 60629 in the city of Chicago (115.2 percent).

Top 20 Zip Codes for Average Gross Flipping ROI

 

Zip Code City County State  Q3 2015 Home Flips Pct of Total Sales YoY Pct Change  Q3 2015 Avg Days to Flip  Q3 2015 Flipping Avg Gross Profit Q3 2015 Avg Gross ROI
21229 Baltimore Baltimore City Maryland 16 12.2% 10.7% 238  $                  67,517 136.0%
33603 Tampa Hillsborough Florida 28 19.3% 86.7% 172  $                103,150 130.2%
60652 Chicago Cook Illinois 17 11.1% 58.0% 214  $                106,036 120.4%
60402 Berwyn Cook Illinois 22 10.7% 188.2% 220  $                125,450 120.3%
60629 Chicago Cook Illinois 22 8.0% 6.7% 217  $                106,197 115.2%
33803 Lakeland Polk Florida 11 8.9% 101.1% 207  $                  60,641 106.4%
60638 Chicago Cook Illinois 18 9.7% 58.6% 234  $                123,009 104.6%
60634 Chicago Cook Illinois 25 10.0% 46.3% 225  $                157,379 103.8%
21207 Gwynn Oak Baltimore Maryland 32 27.1% 108.6% 209  $                  96,754 97.8%
17331 Hanover York Pennsylvania 17 9.2% 100.6% 186  $                  79,455 97.5%
37043 Clarksville Montgomery Tennessee 18 6.3% -10.8% 186  $                  98,617 95.1%
32205 Jacksonville Duval Florida 28 15.1% 86.9% 177  $                  62,329 94.7%
37209 Nashville Davidson Tennessee 18 9.2% 22.6% 203  $                131,075 93.3%
33713 Saint Petersburg Pinellas Florida 27 12.6% -3.4% 170  $                  71,507 93.2%
44060 Mentor Lake Ohio 14 4.8% 32.2% 230  $                  64,173 91.4%
23701 Portsmouth Portsmouth City Virginia 10 12.3% 188.9% 241  $                  66,221 89.1%
70058 Harvey Jefferson Louisiana 17 12.1% 189.4% 193  $                  65,927 88.0%
33755 Clearwater Pinellas Florida 20 14.0% 67.8% 190  $                  77,521 87.6%
33952 Port Charlotte Charlotte Florida 30 10.9% 63.1% 219  $                  65,968 87.0%
20748 Temple Hills Prince George’s County Maryland 13 21.0% 85.2% 164  $                105,910 86.8%

 

Report methodology

RealtyTrac analyzed sales deed data and automated valuation data for this report. A single family  home or condo flip was any transaction that occurred in the second quarter where a previous sale on the same property had occurred within the last 12 months. Average gross profit was calculated by subtracting the average price for the first sale (purchase) from the average price of the second sale (flip). Average gross return on investment was calculated by dividing the average gross profit by the first sale (purchase) price.

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About RealtyTrac
RealtyTrac is a leading provider of comprehensive U.S. housing and property data, including nationwide parcel-level records for more than 130 million U.S. properties. Detailed data attributes include property characteristics, tax assessor data, sales and mortgage deed records, distressed data, including default, foreclosure and auctions status, and Automated Valuation Models (AVMs). Sourced from RealtyTrac subsidiary Homefacts.com, the company’s proprietary national neighborhood-level database includes more than 50 key local and neighborhood level dynamics for residential properties, providing unrivaled pre-diligence capabilities and a parcel risk database for portfolio analysis. RealtyTrac’s data is widely viewed as the industry standard and, as such, is relied upon by real estate professionals and service providers, marketers and financial institutions, as well as the Federal Reserve, U.S. Treasury Department, HUD, state housing and banking departments, investment funds and tens of millions of consumers.

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