Welcome!

News Feed Item

U.S. Home Flipping Drops Below 5 Percent of All Sales in the Second Quarter of 2014 to a 2-Year Low

Metro Areas With the Most Flips Include Phoenix, Los Angeles and Miami; Investors Realized Average Gross Profit of $46,000 per Flip, a 21 Percent Return

IRVINE, CA -- (Marketwired) -- 08/22/14 -- RealtyTrac® (www.realtytrac.com), the nation's leading source for comprehensive housing data, today released its Q2 2014 U.S. Home Flipping Report, which shows that nearly 31,000 single family homes were flipped nationwide in the second quarter of 2014 -- where a home is purchased and subsequently sold again within 12 months -- representing 4.6 percent of all U.S. single family home sales, down from 5.9 in the first quarter of 2014 and down from 6.2 percent in the second quarter of 2013.

Investors averaged a gross profit of more than $46,000 per flip on homes flipped in the second quarter of 2014, a 21 percent gross return on the initial investment. The average gross return was down from 24 percent in the first quarter and down from 31 percent a year ago, which was the peak in percentage return on flips nationwide since RealtyTrac began tracking the flipping data in the first quarter of 2011.

"Home flipping is settling back into a more historically normal pattern after a flurry of flipping during the recent run-up in home prices in 2012 and 2013," said Daren Blomquist, vice president at RealtyTrac. "Flippers no longer have the luxury of 20 to 30 percent annual price gains to pad their profits. As the market softens, successful flippers will need to focus on finding properties that they can buy at a discount and efficiently add value to."

Other high-level findings in the report:

  • Flips completed in the second quarter took an average of 187 days to complete, up from an average of 164 days in the previous quarter and up from an average of 135 days for flips completed in the second quarter of 2013.

  • High-end homes represented an increasing share of homes flipped in the second quarter. Homes with a flipped sale price of $750,000 or higher represented 4.10 percent of all homes flipped during the quarter, up 21 percent from a year ago, while homes with a flipped price of $400,000 to $750,000 represented 12.66 percent of all flips, up 10 percent from a year ago. Flips on homes priced below $400,000 declined as a share of all flips from a year ago.

  • The best returns on homes flipped in the second quarter were on homes with a flipped sale price between $750,000 and $1 million, yielding a 41 percent average gross return on investment. Homes in the $50,000 to $100,000 range had the second best return at 37 percent, followed by homes above $1 million at 35 percent.

  • Metro areas with the most flips were Phoenix (1,438 flips), Los Angeles (1,371 flips) and Miami (1,290 flips). However, all three metro areas saw declines in flipping activity as a share of total home sales from the previous quarter, and Miami was the only one of the three metro areas to see its home flipping share increase from a year ago.

  • Markets with the best return on flips in the second quarter included Pittsburgh (106 percent), New Orleans (76 percent), Baltimore (73 percent), Virginia Beach, Va. (66 percent) and Daytona Beach, Fla. (63 percent).

  • Metros with the highest dollar amount of average gross profit on home flips included San Jose, Washington, D.C., San Diego, Los Angeles, and Seattle, all of which had an average gross profit of more than $100,000 per flip.

Flippers face low inventory and rising prices in Seattle, Southern California
"We are seeing a lot of interest in the speculative market by investors looking to capitalize on rising home prices in Seattle, but the challenge they're running into is inventory. We currently have about one month of inventory in Seattle, so competition for homes is fierce, and many homes are selling for well above asking price," said OB Jacobi, president of Windermere Real Estate, covering the Seattle market. "This means investors looking to flip a home and make a healthy profit must think outside the box. Gone are the days of lipstick-on-a-pig flips -- today's flips must be total remodels from the studs out with high-end finishes, built-out basements and additional square footage. Those are the homes that are bringing the most return on investors' dollars in Seattle."

"Our market has seen a large amount of property flipping over the last three years as investors made up a large segment of our market with a lot of international money flowing in as well. The properties have seen large appreciation in average and median sales prices so the investors have had a good return on their money and risk taken," said Steve Rodgers, CEO/president & owner of Real Living Lifestyles, covering the San Diego market. "We are seeing some of the investor market slow down due to an increase in inventory and prices pushing some flippers out of the market, but real estate still remains a great investment no matter who is jumping in!"

"Opportunities for investors to flip homes is still very much alive and well in Southern California as inventory is starting to expand," said Chris Pollinger, senior vice president of sales at First Team Real Estate, covering Orange, Riverside and San Bernardino counties in the Southern California market.

Phoenix and Los Angeles flippers espouse extensive rehab on flips
Maria Giordano, a former nurse-turned-flipper who has flipped more than 20 houses in the Phoenix market over the past two years, takes a rehab-heavy approach when flipping a house.

"I am one of those flippers who is not just replacing paint and carpet," she said, adding that her typical flip is a home that is 40 to 50 years old but that she also does extensive rehab on newer homes. "Even if it's a house that was built in the 1990s, I'm gutting the master bath, usually the hallway bath, taking out walls, really changing the floor plan ... so really you're giving someone the look of a brand new house in an older neighborhood."

Jennifer Laske, who has been flipping homes in the Compton and Inglewood areas of Los Angeles for the past two years with her husband, said she takes a similar approach.

"Putting lipstick on the problem isn't going to end us up with a beautiful house," she said of a recent flip that required ripping out walls and shoring up the foundation. "The floor plan layouts that we've changed, everything that we've done here is to maximize the dollar amount when this house sells, and also make somebody really love this house. So we're not trying to put some paint here and trick anyone, we're actually trying to make a really beautiful house."

Report methodology
RealtyTrac analyzed sales deed data and automated valuation data for this report. A single family home flip was any transaction that occurred in the second quarter where a previous sale on the same property had occurred within the last 12 months.

Special note on methodology change in second quarter of 2014: RealtyTrac adjusted its methodology for flipping to include properties bought and subsequently resold within 12 months vs. six months in previous reports. This methodology was applied retroactively to previous quarters as well for comparison.

Data Licensing and Custom Report Order
Investors, businesses and government institutions can contact RealtyTrac to license bulk foreclosure and neighborhood data or purchase customized reports. For more information contact our Data Licensing Department at 800.462.5193 or [email protected].

About RealtyTrac
RealtyTrac is a leading supplier of U.S. real estate data, with nationwide parcel-level records for more than 129 million U.S. parcels that include property characteristics, tax assessor data, sales and mortgage deed records, Automated Valuation Models (AVMs) and 20 million active and historical default, foreclosure auction and bank-owned properties. RealtyTrac's housing data and foreclosure reports are relied on by many federal government agencies, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate.

Embedded Video Available

Embedded Video Available: http://www2.marketwire.com/mw/frame_mw?attachid=2662733

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, led attendees through the exciting evolution of the cloud. He looked at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering m...
No hype cycles or predictions of a gazillion things here. IoT is here. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, an Associate Partner of Analytics, IoT & Cybersecurity at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He also discussed the evaluation of communication standards and IoT messaging protocols, data...
Recently, WebRTC has a lot of eyes from market. The use cases of WebRTC are expanding - video chat, online education, online health care etc. Not only for human-to-human communication, but also IoT use cases such as machine to human use cases can be seen recently. One of the typical use-case is remote camera monitoring. With WebRTC, people can have interoperability and flexibility for deploying monitoring service. However, the benefit of WebRTC for IoT is not only its convenience and interopera...
In a recent survey, Sumo Logic surveyed 1,500 customers who employ cloud services such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). According to the survey, a quarter of the respondents have already deployed Docker containers and nearly as many (23 percent) are employing the AWS Lambda serverless computing framework. It’s clear: serverless is here to stay. The adoption does come with some needed changes, within both application development and operations. Tha...
As many know, the first generation of Cloud Management Platform (CMP) solutions were designed for managing virtual infrastructure (IaaS) and traditional applications. But that's no longer enough to satisfy evolving and complex business requirements. In his session at 21st Cloud Expo, Scott Davis, Embotics CTO, explored how next-generation CMPs ensure organizations can manage cloud-native and microservice-based application architectures, while also facilitating agile DevOps methodology. He expla...
Product connectivity goes hand and hand these days with increased use of personal data. New IoT devices are becoming more personalized than ever before. In his session at 22nd Cloud Expo | DXWorld Expo, Nicolas Fierro, CEO of MIMIR Blockchain Solutions, will discuss how in order to protect your data and privacy, IoT applications need to embrace Blockchain technology for a new level of product security never before seen - or needed.
Recently, REAN Cloud built a digital concierge for a North Carolina hospital that had observed that most patient call button questions were repetitive. In addition, the paper-based process used to measure patient health metrics was laborious, not in real-time and sometimes error-prone. In their session at 21st Cloud Expo, Sean Finnerty, Executive Director, Practice Lead, Health Care & Life Science at REAN Cloud, and Dr. S.P.T. Krishnan, Principal Architect at REAN Cloud, discussed how they built...
Sanjeev Sharma Joins June 5-7, 2018 @DevOpsSummit at @Cloud Expo New York Faculty. Sanjeev Sharma is an internationally known DevOps and Cloud Transformation thought leader, technology executive, and author. Sanjeev's industry experience includes tenures as CTO, Technical Sales leader, and Cloud Architect leader. As an IBM Distinguished Engineer, Sanjeev is recognized at the highest levels of IBM's core of technical leaders.
Digital transformation is about embracing digital technologies into a company's culture to better connect with its customers, automate processes, create better tools, enter new markets, etc. Such a transformation requires continuous orchestration across teams and an environment based on open collaboration and daily experiments. In his session at 21st Cloud Expo, Alex Casalboni, Technical (Cloud) Evangelist at Cloud Academy, explored and discussed the most urgent unsolved challenges to achieve f...
Nordstrom is transforming the way that they do business and the cloud is the key to enabling speed and hyper personalized customer experiences. In his session at 21st Cloud Expo, Ken Schow, VP of Engineering at Nordstrom, discussed some of the key learnings and common pitfalls of large enterprises moving to the cloud. This includes strategies around choosing a cloud provider(s), architecture, and lessons learned. In addition, he covered some of the best practices for structured team migration an...
"WineSOFT is a software company making proxy server software, which is widely used in the telecommunication industry or the content delivery networks or e-commerce," explained Jonathan Ahn, COO of WineSOFT, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Synametrics Technologies will exhibit at SYS-CON's 22nd International Cloud Expo®, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. Synametrics Technologies is a privately held company based in Plainsboro, New Jersey that has been providing solutions for the developer community since 1997. Based on the success of its initial product offerings such as WinSQL, Xeams, SynaMan and Syncrify, Synametrics continues to create and hone inn...
There is a huge demand for responsive, real-time mobile and web experiences, but current architectural patterns do not easily accommodate applications that respond to events in real time. Common solutions using message queues or HTTP long-polling quickly lead to resiliency, scalability and development velocity challenges. In his session at 21st Cloud Expo, Ryland Degnan, a Senior Software Engineer on the Netflix Edge Platform team, will discuss how by leveraging a reactive stream-based protocol,...
Modern software design has fundamentally changed how we manage applications, causing many to turn to containers as the new virtual machine for resource management. As container adoption grows beyond stateless applications to stateful workloads, the need for persistent storage is foundational - something customers routinely cite as a top pain point. In his session at @DevOpsSummit at 21st Cloud Expo, Bill Borsari, Head of Systems Engineering at Datera, explored how organizations can reap the bene...
The past few years have brought a sea change in the way applications are architected, developed, and consumed—increasing both the complexity of testing and the business impact of software failures. How can software testing professionals keep pace with modern application delivery, given the trends that impact both architectures (cloud, microservices, and APIs) and processes (DevOps, agile, and continuous delivery)? This is where continuous testing comes in. D