U.S. Home Flipping at a 10-Year High

On Thursday, ATTOM Data Solutions, a multi-sourced national property data warehouse, released its 2016 Year-End U.S. Home Flipping Report, showing that 193,009 single family homes and condos were flipped in 2016, an activity up 3.1 percent from 2015 to the highest level since 2006, when 276,067 single family homes and condos were flipped in that year.

The home flips for 2016 (at 5.7 percent) were still well below the peak of 2005, when 338,207 single family homes and condos were flipped, representing 8.2 percent of all sales.

ATTOM Data Solutions defines a home flip as a property that is sold for the second time within a 12-month period, based on publicly recorded sales deed data collected by ATTOM Data Solutions in more than 950 counties accounting for more than 80 percent of the U.S. population.

The report also shows that 126,256 entities (individuals and institutions) flipped homes in 2016, up less than 1 percent from 2015 to the highest number since 2007, when 143,266 entities flipped properties.

“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,” said Daren Blomquist, SVP at ATTOM Data Solutions.

The share of flipped homes purchased by flippers with financing increased to an eight-year high of 31.5 percent in 2016, while the median age of homes flipped increased to 37 years, a new high going back to 2000, or as far back as data is available.

The median square footage of homes flipped decreased to 1,422, or a new record low going back to the year 2000.

“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.”

Profits reach new record high in 2016

In 2016, flipped homes sold for a median price of $189,900, a gross flipping profit of $62,624 above the median purchase price of $127,276 and representing a gross flipping return on investment (ROI) of 49.2 percent. Both the gross flipping dollar amount and ROI were the highest going back to 2000.

Among 117 metropolitan statistical areas with at least 250 home flips in 2016, there were 11 with an average gross flipping profit of $100,000 or more in 2016:

• San Jose, California ($145,750)
• Boston, Massachusetts ($140,000)
• San Francisco, California ($140,000)
• New York, New York ($127,250)
• Los Angeles, California ($127,000)
• San Diego, California ($111,000)
• Oxnard-Thousand Oaks-Ventura, California ($105,000)
• Seattle, Washington ($102,000)
• Vallejo-Fairfield, California ($101,000)
• Baltimore, Maryland ($100,500)
• Washington, D.C. ($100,000)

“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 added. “Given that many of these markets are more affordable, we are also seeing a higher share of the flipped homes sold to FHA buyers, with that share reaching a four-year high of 19.6 percent in 2016.”

To read the full report, click here.