Home Flipping Increased 3.1% In 2016 To Reach Highest Level In A Decade

Posted by Patrick Barnard on March 13, 2017 No Comments
Categories : Residential Mortgage

About 193,000 single-family homes and condos were “flipped” in 2016, an increase of 3.1% compared with 2015 to reach the highest level since 2006, when about 276,000 were flipped, according to a recent report from ATTOM Data Solutions.

The firm defines a flip as when a house is sold in an arms-length transfer for the second time within a 12-month period

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

Interestingly, the report shows that the share of flipped homes that were purchased with financing increased to an eight-year high of 31.5%.

“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,” says Daren Blomquist, senior vice president at ATTOM Data Solutions, in a statement. “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.”

The report also shows that that average age of a home that was flipped in 2016 increased to 37 years.

“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 adds. “Given that many of these markets are more affordable, we are also seeing a higher share of the flipped homes sold to Federal Housing Administration buyers, with that share reaching a four-year high of 19.6 percent in 2016.”

The report also shows that of the homes flipped in 2016, the average price was $189,900, a new record high. The average gross profit was $62,624, representing return on investment (ROI) of about 49.2%.

Both the gross flipping dollar amount and ROI were the highest going back to 2000, the earliest home flipping data is available for the report.

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