IRVINE, CA–(Marketwired – Jul 19, 2013) – RealtyTrac® (www.realtytrac.com), the leading online marketplace for real estate data, today released its Midyear 2013 Home Flipping Report, which shows 136,184 single family home flips — where a home is purchased and subsequently sold again within six months — in the first half of 2013, up 19 percent from a year ago and up 74 percent from the first half of 2011.
The report also shows that real estate investors made an average gross profit of $18,391 on single family home flips in the first half of the year, a 9 percent gross return on the initial purchase price. That was up 246 percent from an average gross return of $5,321 in the first half of 2012 and an average loss of -$13,206 in the first half of 2011.
Real estate investors who flipped homes in the first half of the year purchased those homes at a discount of 5 percent below estimated market value on average, and sold them at a premium of 1 percent above estimated market value on average.
“While flipping continues to be profitable in most markets, particularly those where the home price recovery is still nascent and a recent rebound in foreclosure activity allows investors to find distressed inventory at a discount, home flipping is tapering off in markets where fewer of those distressed bargains are available,” said Daren Blomquist, vice president at RealtyTrac. “Out of the 100 markets we analyzed for the report, 32 had declining flipping numbers, including perennial flipping hot spots like Las Vegas, Phoenix, Southern California and Atlanta. Still flipping was on the rise in more than two-thirds of the markets, including New York, Washington, D.C., Chicago and several Florida metros.”
Local broker perspectives
“Investors are back in a big way, from acquiring one-offs to larger portfolios of properties, especially in the five boroughs of New York City,” said Emmett Laffey, CEO of Laffey Fine Homes International, covering Long Island and the five New York City boroughs. “As distressed properties hit the market they are sold quickly, and investors know that once the property is renovated and cleaned up the market for end users willing to pay top market dollar is strong.”
“While flipping of homes continues to be of great interest to many people in the general public as they see this as an easy way to make a fast profit, the opportunity to buy and flip homes in Southern California is diminishing each month, as the price to purchase fixer-uppers continues to increase rapidly,” said Rich Cosner, CEO at Prudential California Realty covering Orange, Riverside and San Bernardino counties in Southern California. “The allure of a quick profit from flipping can entice many first-time home buyers but the gross profit does not take into account the costs of repairs, upgrades, cleanup and the money spent while owning the property. In some areas home prices have increased so much that there is little or no profit available to flip it.”
“The Reno-Sparks area was one of the first to see an increase in distressed sales and like many of our sister markets we are one of the first out. The 32 percent decline in flipped homes in the last year is likely due to the decrease in distressed sales and it’s actually a positive sign of the housing recovery we are experiencing,” said Craig King, COO at Chase International brokerage serving the Reno and Lake Tahoe markets. “While there will always be a market for sharp home flippers our marketplace numbers indicate that home flipping here is back to a place best left to the professionals.”
“Many investors who buy homes to flip have holding restrictions placed on them, so they rent the property with the idea that after a few years they’ll put it on the market and sell it,” said Sheldon Detrick, CEO of Prudential Detrick/Alliance Realty in Oklahoma City and Tulsa. “There is a pronounced reluctance from these investors to sell now because rental rates are skyrocketing, especially in Oklahoma City due to the tornado, and we are experiencing a 10 percent appreciation on home values. Many investors who may have intended to flip properties are not putting them back on the market because they can rent the property for a profit while it continues to appreciate.”
Top 15 Markets for Profitable Home Flipping
Metro Area
Single Family Flips First Half 2013
YoY Pct Change
Avg Purchase Price
Avg Gross Profit
Gross Profit Pct
Avg Purchase Discount
Deltona-Daytona Beach-Ormond Beach, FL
729
111%
$62,826
$51,657
82%
-38%
Omaha-Council Bluffs, NE-IA
2,662
329%
$153,617
$85,537
56%
-4%
Palm Coast, FL
528
267%
$127,896
$43,721
34%
-11%
Pittsburgh, PA
617
79%
$114,355
$36,537
32%
-28%
Tampa-St. Petersburg-Clearwater, FL
2,673
32%
$102,193
$23,446
23%
-17%
Port St. Lucie, FL
1,001
105%
$105,824
$18,433
17%
-5%
Cape Coral-Fort Myers, FL
1,401
14%
$134,644
$22,524
17%
-11%
Jacksonville, FL
1,823
260%
$133,968
$21,326
16%
-8%
Charleston-North Charleston, SC
551
97%
$229,813
$29,850
13%
-14%
Virginia Beach-Norfolk-Newport News, VA-NC
542
14%
$206,765
$26,565
13%
-12%
Chicago-Naperville-Joliet, IL-IN-WI
2,845
86%
$195,360
$23,099
12%
-8%
Washington-Arlington-Alexandria, DC-VA-MD-WV
3,169
108%
$403,441
$46,205
11%
-4%
Cincinnati-Middletown, OH-KY-IN
1,191
85%
$123,938
$13,996
11%
-10%
New York-Northern New Jersey-Long Island, NY-NJ-PA
5,485
437%
$376,224
$39,458
10%
-3%
Orlando-Kissimmee, FL
2,417
75%
$141,192
$14,394
10%
-4%
Report methodology
RealtyTrac analyzed sales deed data and automated valuation data for this report. A single family home flip was any transaction that occurred in the first half of the year where a previous sale on the same property had occurred within the last six months. RealtyTrac analyzed only metro areas with at least 200 sales in the first half of the year. To determine the top 15 markets for profitable flipping, RealtyTrac narrowed the metro list to only those with at least 500 flips in the first half of the year and where flipping had increased 10 percent or more from the previous year and where the gross profit percent was at least 10 percent. The top 15 list was then sorted by gross profit percent, from greatest to least.
U.S. and State Totals for Home Flipping
State
Single Family Flips First Half 2013
YoY PCt Change
Avg Purchase Price*
Avg Gross Profit
Gross Profit Pct
Avg Purchase Discount
U.S. Totals
136,184
19%
$200,942
$18,391
9%
-5%
Alabama
1,644
45%
$133,441
-$24,804
-19%
4%
Alaska
45
2%
–
–
–
–
Arizona
6,554
-33%
$172,561
$22,692
13%
-4%
Arkansas
923
256%
$144,822
$9,855
7%
-5%
California
18,407
-19%
$291,516
$39,359
14%
-1%
Colorado
2,634
-2%
$189,636
$31,896
17%
-11%
Connecticut
212
16%
$217,885
$30,935
14%
-13%
Delaware
461
36%
–
–
–
–
District of Columbia
57
0%
$238,298
$191,103
80%
-28%
Florida
17,707
48%
$121,243
$30,861
25%
-16%
Georgia
7,788
-20%
$176,358
-$9,789
-6%
0%
Hawaii
35
-54%
$482,018
$97,120
20%
-16%
Idaho
414
-32%
–
–
–
–
Illinois
3,903
161%
$169,556
$21,678
13%
-5%
Indiana
1,416
-24%
–
–
–
–
Iowa
733
36%
$119,299
-$1,402
-1%
-10%
Kansas
73
24%
–
–
–
–
Kentucky
353