Housing Flips May Start to Flop

March 2, 2015

Last year, 5.4 percent of all single-family home sales – or 136,269 -- were from flipped homes – the lowest share of flips since 2011, according to a newly released 2014 year-end U.S. Home Flipping Report released by RealtyTrac.

The fourth quarter of 2014 did show a slight uptick in housing flips by investors – up 11 percent from the previous quarter – but remained down 12 percent compared to year ago levels.

"Investors have picked much of the low-hanging fruit when it comes to home flipping over the past three years since home prices bottomed out in the first quarter of 2012," says Daren Blomquist, vice president at RealtyTrac. "As home price appreciation slows to single digits in most markets, flippers need to be more selective and creative about the properties and neighborhoods they target. In many cases the best neighborhoods for profitable flipping in a slower-appreciating market are those that come with a higher risk because of location and condition of properties, but also have a bigger upside if investors are able to correctly predict the path of progress in the region. It appears that most investors completing flips in the fourth quarter were able to do just that. Even though the share of flips was down from a year ago during the quarter, the average gross return per flip increased."

Where Home Flipping Remains Elevated

The following chart shows the ZIP codes that had the highest share of housing flips in the fourth-quarter. In these 10 ZIP codes alone home flips comprised 25 percent or more of all single-family home sales during the quarter, according to RealtyTrac’s report.

  • 48225: Harper Woods in Detroit-Warren-Livonia, Mich., metro area
  • 90002: Los Angeles in Los Angeles-Long Beach-Santa Ana, Calif.
  • 90003: Los Angeles in Los Angeles-Long Beach-Santa Ana, Calif.
  • 38116: Memphis in Memphis, Tenn.-Miss.-Ark.
  • 48141: Inkster in Detroit-Warren-Livonia, Mich.
  • 32254: Jacksonville in Jacksonville, Fla.
  • 33055: Opa Locka in Miami-Fort Lauderdale-Pompano Beach, Fla.
  • 33634: Tampa in Tampa-St. Petersburg-Clearwater, Fla.
  • 33169: Miami in Miami-Fort Lauderdale-Pompano Beach, Fla.
  • 92105: San Diego in San Diego-Carlsbad-San Marcos, Calif.

View the full report at RealtyTrac’s website.

Source: “5 Percent of Single Family Home Sales in 2014 Were Flips, Down to Lowest Level Since 2011 Despite Increase in Q4,” RealtyTrac (Feb. 26, 2015)