RealtyTrac’s Q1 2016 U.S. Home Flipping Report finds that 6.6 percent of all U.S. single-family home and condo sales in the first quarter of 2016 were flips – a 20 percent increase quarter to quarter and 3 percent increase year to year.
The percent share of flips was still 26 percent below the 9 percent share at the peak of home flipping in the first quarter of 2006 – but was 55 percent above the recent trough in home flipping.
For the report, a home flip is a property sold in an arms-length sale for the second time within a 12 month period. After faltering in late 2014, home flipping has been gaining steam for the last year and a half thanks to falling interest rates and a dearth of housing inventory for flippers to complete against. While responsible home flipping is helpful for a housing market, excessive and irresponsible flipping activity can contribute to a home price pressure cooker – and we are starting to see evidence of that in a handful of markets. However, the current rate of home flipping is not far above its historic norm, and home flippers in most markets appear to be behaving rationally and responsibly.
In the first quarter, 71 percent of flipped homes were purchased with cash compared to 37 percent at the height of the flipping boom.
Florida metro areas with strong flipping numbers
Home flipping hits new all-time highs in 7 percent of U.S. markets, but in a few Florida metro areas, 1 in 10 home sales involved a flip.
One Florida area – Deltona-Daytona Beach – ranked third in RealtyTrac’s top five for highest share of flipping with 11.8 percent of sales of a flipped home. Other Florida markets where the share of homes flipped surpassed the national average included Tampa (10.8 percent), Miami (9.5 percent) and Jacksonville (9.4 percent).
There continues to be good opportunities for cash investors in the South Florida market. One out of 10 transactions in the first quarter were flipped investor deals yielding an average of $65,000 gross profit with an average of 51 percent gross ROI.
Gross flipping profit
Homes flipped in the first quarter yielded an average gross profit of $58,250 – a more than 10 year high and average 47.8 percent return on the original purchase price. The average gross flipping profit is the difference between the purchase price and the flipped price, and it doesn’t include rehab costs and other expenses.
