IRVINE, Calif. – Oct. 29, 2015 – RealtyTrac’s Q3 2015 U.S. Home Flipping Report finds that 43,197 single-family U.S. homes and condos were flipped – sold as part of an arms-length sale for the second time within a 12-month period – in the third quarter of 2015 – 5.0 percent of all single-family and condo sales for the quarter.
Florida ranked second overall for single-family and condo property flips (7.9 percent) behind Nevada (8.4 percent). Other states in the top five include Alabama (7.5 percent), Arizona (6.9 percent) and Tennessee (6.6 percent).
Among 101 markets with at least 75 single family and condo flips in the third quarter, those with highest share of flipping were Memphis (10.5 percent), Fresno (9.5 percent), Mobile, Alabama (9.2 percent), Tampa (9.1 percent) and Deltona-Daytona Beach-Ormond Beach, Florida (9.0 percent).
Other major markets with an above-average share of flipped homes are Las Vegas (8.7 percent), Miami (8.6 percent), Jacksonville, Florida (7.6 percent), Baltimore (7.4 percent), Birmingham, Alabama (7.4 percent), Phoenix (7.3 percent), Orlando (7.2 percent), New Orleans (6.9 percent), Virginia Beach (6.8 percent), and Riverside-San Bernardino in Southern California (6.5 percent).
“We are seeing the capitalistic market working well in South Florida with everyone winning,” says Mike Pappas, CEO and president of the Keyes Company, covering South Florida. “The flipper is providing updated, improved inventory that is desirable to buyers.”
While Florida didn’t make any top lists for home flips to millennial buyers, it shined in home flips to baby boomers, many of whom have retired or will do so soon.
RealtyTrac identified 15 counties where the average gross return on a flipped home in the third quarter was at least 30 percent, and the baby boomer population was at least 25 percent. Of these counties, the top five were all in Florida: Charlotte and Hernando counties in Southwest Florida, and Volusia, Brevard and Marion counties in Central Florida. The only counties outside Florida in the top 15 list for baby-boomer flips were Skagit County, Washington; Sussex County, Delaware; and Henderson County, North Carolina.
Nationwide, flipping’s 5.0 percent share in the third quarter was down from a 5.4 percent share in the second quarter, but it was up 18 percent year-to-year.
“After curtailing flipping activity last year due to slowing home price appreciation and shrinking inventory of flip-worthy homes, real estate investors have started to jump back on the flipping bandwagon in 2015,” says Daren Blomquist, vice president at RealtyTrac. “On the acquisition side, investors are finding creative ways to pinpoint potential flips in the off-market arena, and on the disposition side investors have a bigger pool of potential buyers thanks to a surge in FHA buyers this year – many of them first-time buyers looking for starter homes.”
Average gross flipping profit
The difference between purchase price and flipped price (not including rehab costs and other expenses incurred) was $62,122 for completed home flips in the third quarter. That’s down slightly from an average gross flipping profit of $62,521 in the second quarter but up from an average gross flipping profit of $61,781 in the third quarter of 2014.
The average gross return on investment (ROI) – the average gross profit as a percentage of the average original purchase price – was 33.8 percent for completed home flips in the third quarter, down from 34.4 percent in the previous quarter but up from 32.7 percent in the third quarter of 2014.
© 2015 Florida Realtors®