Home Flipping Hits Lowest Since 2009 In Q3

Based on RealtyTrac’s Q3 2014 U.S. Home Flipping Report released yesterday, home flipping sales have decreased across the country both quarter-over-quarter and year-over-year hitting its lowest level since 2009’s second quarter.

Home flipping sales, described as homes bought and sold within a year, accounts only for 4 percent of all single-family homes sales in the country in the third quarter. It has declined from 4.6 percent in this year’s second quarter and from 5.6 percent in the third quarter of last year.

Furthermore, the home flipping average gross return in the third quarter was 36 percent, which is a bit higher from the second quarter’s 35 percent yet slightly down from the 37 percent from the same quarter last year. Based on RealtyTrac’s report, $75,990 was the average gross profit per home flipped for investors in the third quarter.

“Flipping returned to its historic norm of 4 percent in the third quarter as home price appreciation cooled in many of the hot flipping markets across the country,” RealtyTrac’s VP Daren Blomquist said. “Meanwhile, the record-high average profits per flip in the quarter demonstrate that flippers are still filling an important niche in an aging housing market with historically low levels of new homes being built. The most successful flippers are buying older, outdated homes in established neighborhoods and rehabbing them extensively to appeal to modern tastes.”

“The markets with an increase in flipping tend to be those with older, distressed inventory still available that flippers can often buy at a discount and add value to,” Blomquist added. “Those discounted distressed properties have become harder to find, but a recent jump in scheduled foreclosure auctions could provide more fodder for flippers in the next three to six months.

The average period of time for a home flip to be completed in the third quarter was 185 days, which is a slight drop from second quarter’s 187 days but a increase from 133 days from 2013’s third quarter.

As for the best returns on homes flipped in the third quarter, RealtyTrac’s report show that those homes with a flipped sale price between $1 to $2 million saw the greatest average return on investment at 45 percent followed by homes sold between $100,000 to $200,000 at 43 percent and $200,000 to $300,000 price range at 41 percent.

RealtyTrac’s report also showed that homes constructed before 1990 accounted for 74 percent of all flipped homes in the third quarter. As for homes built from 1990 to 1999, they accounted for 10 percent of flipped homes, while those homes constructed in 2000 or later represented 17 percent.