New York,Washington, Chicago, Tampa, Omaha Among Top 15 Markets forFlipping
Average Gross Profit Up 246Percent, But Flippers Lost Money in 27 of 100 Markets
IRVINE,Calif. – July 19, 2013 — RealtyTrac® (www.realtytrac.com), theleading online marketplace for real estate data, today released its Midyear2013 Home Flipping Report, which shows 136,184 single family home flips — wherea home is purchased and subsequently sold again within six months — in thefirst half of 2013, up 19 percent from a year ago and up 74 percent from thefirst half of 2011.
The report also shows that real estateinvestors made an average gross profit of $18,391 on single family home flipsin the first half of the year, a 9 percent gross return on the initial purchaseprice. That was up 246 percent from an average gross return of $5,321 in thefirst half of 2012 and an average loss of -$13,206 in the first half of2011.
Real estate investors who flipped homes in the firsthalf of the year purchased those homes at a discount of 5 percent belowestimated market value on average, and sold them at a premium of 1 percentabove estimated market value on average.
“While flippingcontinues to be profitable in most markets, particularly those where the homeprice recovery is still nascent and a recent rebound in foreclosure activityallows investors to find distressed inventory at a discount, home flipping istapering off in markets where fewer of those distressed bargains areavailable,” said Daren Blomquist, vice president at RealtyTrac. “Out of the 100markets we analyzed for the report, 32 had declining flipping numbers,including perennial flipping hot spots like Las Vegas, Phoenix, SouthernCalifornia and Atlanta. Still flipping was on the rise in more than two-thirdsof the markets, including New York, Washington, D.C., Chicago and severalFlorida metros.”
“Investors are back in a big way, fromacquiring one-offs to larger portfolios of properties, especially in the fiveboroughs of New York City,” said Emmett Laffey, CEO of Laffey FineHomes International, covering Long Island and the five New York Cityboroughs. “As distressed properties hit the market they are sold quickly, andinvestors know that once the property is renovated and cleaned up the marketfor end users willing to pay top market dollar isstrong.”
“While flipping of homes continues to be of greatinterest to many people in the general public as they see this as an easy wayto make a fast profit, the opportunity to buy and flip homes in SouthernCalifornia is diminishing each month, as the price to purchase fixer-upperscontinues to increase rapidly,” said Rich Cosner, CEO at PrudentialCalifornia Realty covering Orange, Riverside and San Bernardinocounties in Southern California. “The allure of a quick profit fromflipping can entice many first-time home buyers but the gross profit does nottake into account the costs of repairs, upgrades, cleanup and the money spentwhile owning the property. In some areas home prices have increasedso much that there is little or no profit available to flipit.”
“The Reno-Sparks area was one of the first to see anincrease in distressed sales and like many of our sister markets we are one ofthe first out. The 32 percent decline in flipped homes in the lastyear is likely due to the decrease in distressed sales and it’sactually a positive sign of the housing recovery we are experiencing,” saidCraig King, COO at ChaseInternational brokerage serving the Reno and Lake Tahoe markets.”While there will always be a market for sharp home flippers our marketplacenumbers indicate that home flipping here is back to a place best left to theprofessionals.”
“Many investors who buy homes to flip haveholding restrictions placed on them, so they rent the property with the ideathat after a certain period of time they’ll put it on the market and sell it,”said Sheldon Detrick, CEO of PrudentialDetrick/Alliance Realty in Oklahoma City and Tulsa. “There is apronounced reluctance from these investors to sell now because rental rates areskyrocketing, especially in Oklahoma City due to the tornado, and we areexperiencing a 10 percent appreciation on home values. Many investors who mayhave intended to flip properties are not putting them back on the marketbecause they can rent the property for a profit while it continues toappreciate.”
Top 15Markets for Profitable HomeFlipping
RealtyTrac analyzed sales deed data andautomated valuation data for this report. A single family home flip was anytransaction that occurred in the first half of the year where a previous saleon the same property had occurred within the last six months. RealtyTracanalyzed only metro areas with at least 200 sales in the first half of theyear. To determine the top 15 markets for profitable flipping, RealtyTracnarrowed the metro list to only those with at least 500 flips in the first halfof the year and where flipping had increased 10 percent or more from theprevious year and where the gross profit percent was at least 10 percent. Thetop 15 list was then sorted by gross profit percent, from greatest toleast.
U.S. and State Totals for HomeFlipping
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