5 Percent of Single Family Home Sales in 2014 Were Flips, Down to Lowest Level Since 2011 Despite Increase in Q4

Flip Share Increases 11 Percent From Q3 to Q4, Average Gross Profit Up to $65,993;
Zips with Highest Share of Q4 Flips in Detroit, Los Angeles, Memphis and Miami;
Zips with Highest Return on Flips in Baltimore, St. Louis, Jacksonville and Chicago

IRVINE, Calif. – Feb. 27, 2015 — RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its Q4 and Year-End 2014 U.S. Home Flipping Report, which shows that 136,269 U.S. single family homes were flipped in 2014, 5.4 percent of all single family home sales during the year — the lowest share of flips since 2011.

A total of 32,578 U.S. single family homes were flipped in the fourth quarter, representing 5.3 percent of all single family home sales during the quarter. The 5.3 percent share of flips in the fourth quarter was up 11 percent from the previous quarter but still down 12 percent from a year ago.

The average gross profit — the difference between the purchase price and flipped price — for completed flips of single family homes in the fourth quarter was $65,993, representing a 37.1 percent gross return. That was up from an average gross profit of $65,285 representing a 36.5 percent gross return in the third quarter, and an average gross profit of $63,017 representing a 36.4 percent gross return in the fourth quarter of 2013.

“Investors have picked much of the low-hanging fruit when it comes to home flipping over the past three years since home prices bottomed out in the first quarter of 2012,” said Daren Blomquist, vice president at RealtyTrac. “As home price appreciation slows to single digits in most markets, flippers need to be more selective and creative about the properties and neighborhoods they target.

“In many cases the best neighborhoods for profitable flipping in a slower-appreciating market are those that come with a higher risk because of location and condition of properties, but also have a bigger upside if investors are able to correctly predict the path of progress in the region,” Blomquist added. “It appears that most investors completing flips in the fourth quarter were able to do just that. Even though the share of flips was down from a year ago during the quarter, the average gross return per flip increased.”

Zips with highest share of Q4 flips in Detroit, Los Angeles, Memphis, Miami

Among zip codes with at least 10 single family home flips completed in the fourth quarter of 2014, there were 10 where flips represented 25 percent or more of all single family home sales during the quarter. Metropolitan statistical areas with top 10 zip codes for share of flips in the fourth quarter were Detroit, Los Angeles, Memphis, Miami, Jacksonville, Florida, Tampa and San Diego.


Averages from the top 10 zip codes for share of flips during the fourth quarter:

    • Average of 23 flips during the fourth quarter

 

  • Average flip share of 27 percent of all single family home sale

 

 

  • Average increase of 77 percent in share of flips from a year ago

 

 

  • Average purchase price of $110,611

 

 

  • Average gross profit of $95,700 and average gross return of 49.6 percent

 

 

 

Zips with highest gross return on Q4 flips in Baltimore, St. Louis, Jacksonville, Chicago

Among zip codes with at least 10 single family home flips completed in the fourth quarter of 2014, there were 10 where the average gross return on investment for flips was 120 percent or higher. Metropolitan statistical areas with top 10 zip codes for highest average returns on flips in the fourth quarter were Baltimore, St. Louis, Jacksonville, Florida, Chicago, Detroit and Washington, D.C.

 

Averages from these top 10 zip codes for biggest average percentage return on flips:

  • Average of 17 flips during the fourth quarter
  • Average flip share of 12 percent of all single family home sales
  • Average increase of 3 percent in share of flips from a year ago
  • Average purchase price of $66,695
  • Average gross profit of $99,419 and average gross return of 150.9 percent

Zips with biggest annual increase in Q4 flips in Seattle, Atlanta, New York, Chicago, L.A.

Among zip codes with at least 10 single family home flips completed in the fourth quarter of 2014, the top 10 with the biggest year-over-year percentage increase in the share of flips were in the following metropolitan statistical areas: Seattle, Atlanta, New York, Chicago, Los Angeles, Denver, Cincinnati, Sandusky, Ohio, and Akron, Ohio.

Averages from the top 10 zip codes for biggest annual increase in the share of flips:

  • Average of 12 flips during the fourth quarter
  • Average flip share of 11 percent of all single family home sales
  • Average increase of 453 percent in share of flips from a year ago
  • Average purchase price of $201,879
  • Average gross profit of $70,360 and average gross return of 54.5 percent

Metros with highest share of fourth quarter flips

Among metropolitan statistical areas with at least 50 single family home flips in the fourth quarter, those with the highest share of flips as a percentage of total single family home sales were Miami (11.0 percent), Memphis (10.7 percent), Tampa (10.5 percent), Palm Bay-Melbourne-Titusville, Florida (10.1 percent) and Deltona-Daytona Beach-Ormond, Florida (10.0 percent).

Metros with highest gross returns on fourth quarter flips

Among metropolitan statistical areas with at least 50 single family home flips in the fourth quarter, those with the highest average gross percentage return on flips were Flint, Michigan (73.5 percent gross return), Pittsburgh (68.2 percent), Clarksville, Tennessee (67.0 percent), Baltimore (64.0 percent), and Chattanooga, Tennessee (63.4 percent).

Report methodology
RealtyTrac analyzed sales deed data and automated valuation data for this report. A single family home flip was any transaction that occurred in the fourth quarter where a previous sale on the same property had occurred within the last 12 months. 

Data Licensing and Custom Report Order
Investors, businesses and government institutions can contact RealtyTrac to license bulk foreclosure and neighborhood data or purchase customized reports. For more information contact our Data Licensing Department at 800.462.5193 or datasales@realtytrac.com. 

About RealtyTrac
RealtyTrac is a leading supplier of U.S. real estate data, with nationwide parcel-level records for more than 130 million U.S. parcels that include property characteristics, tax assessor data, sales and mortgage deed records, Automated Valuation Models (AVMs) and 20 million active and historical default, foreclosure auction and bank-owned properties. RealtyTrac’s housing data and foreclosure reports are relied on by many federal government agencies, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate.

 
Media Contacts:
Jennifer von Pohlmann
949.502.8300, ext. 139
jennifer.vonpohlmann@realtytrac.com
Ginny Walker
949.502.8300, ext. 268
Ginny.walker@realtytrac.com

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