House Flipping Reaches A Two Year High

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June 02, 2016

Home flipping has become a popular topic, explored through various reality TV shows of late and, according to RealtyTrac’s Q1 2016 Home Flipping Report, growing in popularity in the real world, as well. In the first quarter of 2016, 6.6 percent of total single-family home and condo sales were flips. This is a 3.3 percent year-over-year increase that brings the rate of home flips to its highest point in two years.

As HousingWire reports, the report defined a home flip as a property sold in an arms-length sale for the second time within a 12-month period based on publicly recorded sales deed data collected in over 950 counties, accounting for over 80 percent of the U.S. population.

While the current share of flips is 20 percent above last quarter’s share and 55 percent above 2014’s third quarter market share of 4.3 percent, it is still 26 percent below the peak experienced in 2006 when 9 percent of the share was home flipping.

Home flipping numbers are actually right around the historic norm, despite the large increase in the first quarter. House flipping can often get a bad rap when it is done excessively and irresponsibly, but responsible home flipping can actually be beneficial to the housing market.

In the first quarter, 71 percent of homes that were flipped were purchased with cash, compared to 37 percent at the height of the flipping boom, an indication that flippers are behaving much more rationally.

The profits associated with home flipping have also hit their highest point since the fourth quarter of 2005. An average home flip currently produces a profit of $58,250, but this number does not include the cost for repairs.

Across the country, 7 percent of markets experienced an all-time high in home flipping including cities such as Baltimore and New Orleans.

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