A new report 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, representing 5 percent of all single-family home and condo sales during the quarter, according to RealtyTrac. That 5 percent share was 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. Flips are going on almost everywhere, with 85 percent of local markets posting increases in flipping activity. “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,” Daren Blomquist, vice president at RealtyTrac, said in a release. “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.” A few highlights from the report: Home flipping as a share of sales declined to 5 percent of all sales in Q3, while the average flipping returns (gross ROI) increased to 33.8 percent ($62,122 gross profit). Flippers are taking longer to rehab, list and sell their product, with Q3 completed flips taking an average of nearly six months (175 days). More flips (35.05 percent of all sales) are happening on homes valued between $100,000 and $200,000, while more gross profit is happening at homes valued between $2 million and $5 million. The best counties in which to flip to Millennials included Philadelphia, Pa., and St. Louis City, Mo. The best counties in which to flip to Baby Boomers included Charlotte, Fla., and Volusia, Fla. 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, Pa.; St. Louis City, Mo.; Baltimore City, Md.; Cumberland County, N.C. — in the Fayetteville area — and Kings County, N.Y. — Brooklyn. All five of these counties had average gross flipping profits in the third quarter of 63 percent or more. 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, Wash., between Seattle and Vancouver; Sussex County, Del., on the Atlantic Coast between Washington, D.C., and Philadelphia; and Henderson County, N.C., in the Asheville metro area. 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, Ala. (9.2 percent), Tampa (9.1 percent) and Deltona-Daytona Beach-Ormond Beach, Fla. (9.0 percent). Other major markets where the share of flipped homes was above the national average in the third quarter included Las Vegas (8.7 percent), Miami (8.6 percent), Jacksonville, Fla. (7.6 percent), Baltimore (7.4 percent), Birmingham, Ala. (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). 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, Fla. in the Miami metro area (30.0 percent); 38128 in Memphis (29.5 percent); 63137 in St. Louis (28.6 percent); 33054 in Opa Locka, Fla. (27.8 percent); and 44128 in Cleveland (27.5 percent). 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 Markets with the highest average returns on flipped homes States with the highest average gross flipping […]
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