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Home Flipping Slows in U.S., Investors Fear 'Flying too Close to the Sun'

Home Flipping Slows in U.S., Investors Fear 'Flying too Close to the Sun'


According to RealtyTrac's U.S. Home Flipping Report for the first quarter of 2014, 3.7 percent of all U.S. single family home sales were flips -- where a home is purchased and subsequently sold again within six months -- in the first quarter of 2014, down from 4.1 percent in the fourth quarter of 2013 and down from 6.5 percent in the first quarter of 2013.
 
Daren-Blomquist-VP.jpg

Daren Blomquist

The average sales price of single family homes flipped in the first quarter was $55,574 higher than the average original purchase price. That gross profit provided flippers with an unadjusted ROI (return on investment) of 30 percent of the average original purchase price. The average gross profit per flip a year ago 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," said 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."

Other high-level findings in the report:

 
WPC News | Home Flipping Patterns by Market 2014WPC News | Impact of Rehab Expenditures on Flipping ROIWPC News | US Home Flipping Return on Investment
WPC News | Q1 2014 Home Flips by Price Range


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