House Flippers Get More Bang for Their Buck

May 1, 2014

The number of house flips is edging down, but profits from the practice are rising. About 3.7 percent of all single-family home sales in the first quarter were house flips, according to a new study by RealtyTrac. That’s down from 6.5 percent in the first quarter of 2013.

The sales price of a single-family flip in the first quarter averaged $55,574 higher than the average original purchase price, according to RealtyTrac’s analysis. Flippers saw a gross profit with an unadjusted ROI of 30 percent of the average original purchase price, according to RealtyTrac. A year ago, the average gross profit for a flip was $51,805 for an unadjusted ROI of 28 percent.

“Slowing home-price appreciation early this year in many of the most popular flipping markets put some investors in danger of flying too close to the sun,” says Daren Blomquist, vice president at RealtyTrac. “But investors appear to have recalibrated their flipping strategy, accounting for the slower home price appreciation, even if that means fewer flips. This is another good sign that this housing recovery is behaving much more rationally than the last housing boom, which was built largely on unfounded speculation rather than fact-based calculations.”

Metro areas with a population of at least 1 million that had the highest share of flips in the first quarter were: New York (10.2%); Jacksonville, Fla. (10%); San Diego (7.1%); Las Vegas (6.7%); and Miami (5.9%).

Source: RealtyTrac

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