RealtyTrac: Share Of Home Flips Increased In 2015

Posted by Patrick Barnard on March 04, 2016 No Comments
Categories : Residential Mortgage

Nearly 180,000 single-family homes and condos were flipped in 2015, according to RealtyTrac’s Year-End U.S. Home Flipping Report.

That’s 5.5% of all single-family home and condo sales during the year – up from 5.3% in 2014. It’s also the highest share of homes flipped since 2007, according to the report.

There were about 110,000 investors or entities that completed at least one home flip during the year – the highest since 2007, when there were about 130,000, according to RealtyTrac.

However, in 2005, which was a peak year for home flipping, there were about 259,192 flippers.

As a result of the increase in the number of investors flipping homes during the past year, the ratio of flips to investors decreased. There were 1.63 flips per investor in 2015 – the lowest ratio of flips per investor since 2008.

Last year also marked the first year in four years that the number of flips increased; it had decreased four consecutive years prior to 2015, according to the report.

The share of homes flipped in 2015 increased year-over-year in 83 of 110 metropolitan statistical areas nationwide, according to the report. That’s about 75% of all metro areas tracked.

RealtyTrac defines a “flip” as a property that is sold in an arms-length sale for the second time within a 12-month period.

Data used for the report is derived from publicly recorded sales deeds in more than 950 counties.

“As confidence in the housing recovery spreads, more real estate investors and would-be real estate investors are hopping on the home-flipping bandwagon,” says Daren Blomquist, senior vice president at RealtyTrac, in a release. “Not only is the share of home flips on the rise again, but we also see the flipping trend trickling down to smaller investors who are completing fewer flips per year. The total number of investors who completed at least one flip in 2015 was at the highest level since 2007, and the number of flips per investor was at the lowest level since 2008.

“More inexperienced home flippers with a smaller financial cushion could be a sign of an over-speculative market, but the data indicates that flippers in 2015 continued to operate within relatively conservative margins,” Blomquist adds. “Homes flipped in 2015 were, on average, purchased at a 26 percent discount below estimated market value and re-sold by the flipper at a five percent premium above estimated market value.”

The 5.5% share of U.S. homes flipped in 2015 was still well below the peak of 8.2% in 2005.

The average gross profit from a flip in 2015 was $55,000 – the highest since 2005, when it was $58,750. That’s an average gross return on investment of 45.8%, up from 44.2% in 2014 and up from 35.3% in 2005. The peak return on investment came in 2013, when it reached 46.0%.

For more, including a breakdown of markets that saw the most flips in 2015, click here.

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