RealtyTrac’s Home Flipping Report showed that nationwide, home flipping rose slightly in 2015 from a year earlier. It was the first annual increase in home flipping after four consecutive years of declines, the report stated.
The report showed that 179,778 U.S. single family homes and condos were flipped in 2015, or 5.5 percent of all single family home and condo sales during the year. That’s up from 5.3 percent of homes flipped in 2014, with three-quarters of metropolitan statistical areas nationwide showing share gains in 2015.
For the report, a home flip is defined as a property that is sold in an arms-length sale for the second time within a 12-month period based on publicly recorded sales deed data collected by RealtyTrac in more than 950 counties accounting for more than 80 percent of the U.S. population.
“As confidence in the housing recovery spreads, more real estate investors and would-be real estate investors are hopping on the home flipping bandwagon,” RealtyTrac Senior Vice President Daren Blomquist said in a news release. “Not only is the share of home flips on the rise again, but we also see the flipping trend trickling down to smaller investors who are completing fewer flips per year. The total number of investors who completed at least one flip in 2015 was at the highest level since 2007, and the number of flips per investor was at the lowest level since 2008.”
There were 110,008 investors or entities that completed at least one home flip in 2015, the highest number of home flippers since 2007. The peak in the number of active home flippers was in 2005, with 259,192. There were 1.63 home flips per investor in 2015, the lowest ratio of flips per investor since 2008.
“More inexperienced home flippers with a smaller financial cushion could be a sign of an over-speculative market, but the data indicates that flippers in 2015 continued to operate within relatively conservative margins,” Blomquist said. “Homes flipped in 2015 were on average purchased at a 26 percent discount below estimated market value and re-sold by the flipper at a 5 percent premium above estimated market value.”
The 5.5 percent share of U.S. homes flipped in 2015 still was well below the peak of 8.2 percent of U.S. homes flipped in 2005.
“When home flipping numbers go up, it is usually an indication that the housing market is in trouble,” Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market, said in the release. “The problem with a rise in home flipping is that these sales artificially inflate home prices, making housing even less affordable for buyers and increasing the risk of a bubble. I’m happy to see that the percentage of home flipping sales in Seattle does not exceed the national average and that they’re down from a year ago. This makes sense given our affordability constraints and lower potential for profits for home flippers.”
Metro areas with the biggest year-over-year increase in share of flips were Lakeland, Fla. (up 50 percent); New Haven, Conn. (up 45 percent); Jacksonville, Fla. (up 41 percent); Homosassa Springs, Fla. (up 40 percent); and Akron, Ohio (up 37 percent).
The Miami metro area had the most homes flipped of any market nationwide in 2015, with 10,658, representing 8.6 percent of all Miami-area home sales for the year, up 4 percent from 2014.
States with the highest share of flips in 2015 were Nevada (8.8 percent); Florida (8.0 percent); Alabama (7.4 percent); Arizona (7.1 percent); and Tennessee (6.9 percent).
Among 110 metro areas with at least 250 flips in 2015, those with the highest share of flipping as a percentage of all single family home sales were Memphis, Tenn. (11.1 percent); Fresno, Calif. (9.2 percent); Las Vegas (9.2 percent); Tampa, Fla. (9.2 percent); and Deltona-Daytona Beach-Ormond Beach, Fla. (9.1 percent).