Home flips flew to a decade-high in 2016—and profits followed the flock.
According to ATTOM Data Solutions’ 2016 Year-End U.S. Home Flipping Report, flips rose 3.1 percent from 2015 in 2016, with gross profits averaging $62,624.
“Home flipping was hot in 2016, fueled by low inventory of homes in sellable or rentable condition along with a flood of capital—both foreign and domestic—searching for the returns and stability available with U.S. real estate,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “The combination of more home flips and a greater share of financing for flip purchases resulted in a 19 percent jump in the estimated dollar volume of financing for home flip purchases, up to $12.2 billion for the flips completed in 2016—a nine-year high.”
Roughly 6 percent of condominium and single-family home sales in 2016 were flips, according to the report—the highest share in three years, though below the flipping frenzy of 2005. The share of flips bought with financing reached a high mark, as well, to 31.5 percent.
The highest gross returns on flips in 2016 were realized in Ohio and Pennsylvania: East Stroudsburg, Pa., at 241.5 percent; Pittsburgh, Pa., at 130 percent; Cleveland, Ohio, at 116.2 percent; Philadelphia, Pa., at 107.1 percent; and Toledo, Ohio, at 102 percent.
The markets with flips earning $100,000 or more in profits were concentrated in California: San Jose ($145,750); San Francisco ($140,000); Los Angeles ($127,000); San Diego ($111,000); Oxnard-Thousand Oaks-Ventura ($105,000); and Vallejo-Fairfield ($101,000). Flips in Baltimore, Md., Boston, Mass., New York, N.Y., Seattle, Wash., and Washington, D.C. also earned $100,000 or more.
Flipping occurred the most in Florida and Tennessee, comprising 11.7 percent of all sales in Memphis, Tenn.; 10.1 percent in Clarksville, Tenn.; and 9.9 percent in both Tampa-St. Petersburg and Deltona-Daytona Beach-Ormond Beach, Fla.
“Investors in search of flipping returns are increasingly willing to move to secondary and tertiary housing markets and neighborhoods with older, smaller properties that are available at a deeper discount,” Blomquist says.
Source: ATTOM Data Solutions
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