SOURCE: RealtyTrac

RealtyTrac

February 27, 2015 00:01 ET

5 Percent of U.S. Single Family Home Sales in 2014 Were Flips, Down to Lowest Level Since 2011 Despite Increase in Q4

Flip Share Increases 11 Percent From Q3 to Q4, Average Gross Profit Up to $65,993; Zips with Highest Share of Q4 Flips in Detroit, Los Angeles, Memphis and Miami; Zips with Highest Return on Flips in Baltimore, St. Louis, Jacksonville and Chicago

IRVINE, CA--(Marketwired - February 27, 2015) - RealtyTrac® (www.realtytrac.com), the nation's leading source for comprehensive housing data, today released its Q4 and Year-End 2014 U.S. Home Flipping Report, which shows that 136,269 U.S. single family homes were flipped in 2014, 5.4 percent of all single family home sales during the year -- the lowest share of flips since 2011.

A total of 32,578 U.S. single family homes were flipped in the fourth quarter, representing 5.3 percent of all single family home sales during the quarter. The 5.3 percent share of flips in the fourth quarter was up 11 percent from the previous quarter but still down 12 percent from a year ago.

The average gross profit -- the difference between the purchase price and flipped price -- for completed flips of single family homes in the fourth quarter was $65,993, representing a 37.1 percent gross return. That was up from an average gross profit of $65,285 representing a 36.5 percent gross return in the third quarter, and an average gross profit of $63,017 representing a 36.4 percent gross return in the fourth quarter of 2013.

"Investors have picked much of the low-hanging fruit when it comes to home flipping over the past three years since home prices bottomed out in the first quarter of 2012," said Daren Blomquist, vice president at RealtyTrac. "As home price appreciation slows to single digits in most markets, flippers need to be more selective and creative about the properties and neighborhoods they target.

"In many cases the best neighborhoods for profitable flipping in a slower-appreciating market are those that come with a higher risk because of location and condition of properties, but also have a bigger upside if investors are able to correctly predict the path of progress in the region," Blomquist added. "It appears that most investors completing flips in the fourth quarter were able to do just that. Even though the share of flips was down from a year ago during the quarter, the average gross return per flip increased."

Zips with highest share of Q4 flips in Detroit, Los Angeles, Memphis, Miami
Among zip codes with at least 10 single family home flips completed in the fourth quarter of 2014, there were 10 where flips represented 25 percent or more of all single family home sales during the quarter. Metropolitan statistical areas with top 10 zip codes for share of flips in the fourth quarter were Detroit, Los Angeles, Memphis, Miami, Jacksonville, Florida, Tampa and San Diego.

                   
Zip Code City MSA  Q4 2014
Home
Flips
Pct of
Total
Sales
YoY Pct
Change
 Avg
Purchase
Price
Avg
Gross
ROI
Flipping
Avg Gross
Profit
48141 Inkster Detroit-Warren-Livonia, MI  32 29.4% 234.7%  $41,522 38.2% $15,874
90003 Los Angeles Los Angeles-Long Beach-Santa Ana, CA  15 28.8% 20.2%  $193,733 47.8% $92,567
38116 Memphis Memphis, TN-MS-AR  23 27.7% 9.5%  $57,045 52.1% $29,743
33055 Opa Locka Miami-Fort Lauderdale-Pompano Beach, FL  26 27.4% 62.1%  $103,241 64.8% $66,895
33169 Miami Miami-Fort Lauderdale-Pompano Beach, FL  26 26.8% 52.6%  $105,317 65.5% $68,933
32254 Jacksonville Jacksonville, FL  14 26.4% 71.7%  $61,100 29.7% $18,150
90002 Los Angeles Los Angeles-Long Beach-Santa Ana, CA  16 26.2% 15.4%  $174,214 47.1% $82,071
48225 Harper Woods Detroit-Warren-Livonia, MI  43 25.3% 47.0%  $34,747 50.5% $17,552
33634 Tampa Tampa-St. Petersburg-Clearwater, FL  17 25.0% 35.0%  $89,945 61.6% $55,413
92105 San Diego San Diego-Carlsbad-San Marcos, CA  15 25.0% 225.0%  $245,250 39.0% $95,700
           

Averages from the top 10 zip codes for share of flips during the fourth quarter:

  • Average of 23 flips during the fourth quarter
  • Average flip share of 27 percent of all single family home sales
  • Average increase of 77 percent in share of flips from a year ago
  • Average purchase price of $110,611
  • Average gross profit of $95,700 and average gross return of 49.6 percent

Zips with highest gross return on Q4 flips in Baltimore, St. Louis, Jacksonville, Chicago
Among zip codes with at least 10 single family home flips completed in the fourth quarter of 2014, there were 10 where the average gross return on investment for flips was 120 percent or higher. Metropolitan statistical areas with top 10 zip codes for highest average returns on flips in the fourth quarter were Baltimore, St. Louis, Jacksonville, Florida, Chicago, Detroit and Washington, D.C.

                 
Zip Code City MSA Q4 2014 Home
Flips
Pct of
Total
Sales
YoY Pct
Change
Avg
Purchase
Price
Avg
Gross
ROI
Flipping
Avg Gross
Profit
21218 Baltimore Baltimore-Towson, MD 14 11.0% 2.0% $51,233 208.6% $106,847
63139 Saint Louis St. Louis, MO-IL 18 14.0% -9.3% $9,000 163.9% $14,750
32205 Jacksonville Jacksonville, FL 19 13.8% -10.5% $52,216 157.0% $81,962
60643 Chicago Chicago-Naperville-Joliet, IL-IN-WI 12 11.8% 31.8% $150,750 153.7% $231,750
60402 Berwyn Chicago-Naperville-Joliet, IL-IN-WI 20 11.5% 0.1% $93,000 149.7% $139,222
21207 Gwynn Oak Baltimore-Towson, MD 20 13.2% -29.4% $76,275 149.7% $114,168
48220 Ferndale Detroit-Warren-Livonia, MI 12 6.7% 54.1% $70,200 141.5% $99,300
21213 Baltimore Baltimore-Towson, MD 11 6.7% 19.2% $39,180 137.9% $54,020
63116 Saint Louis St. Louis, MO-IL 21 13.3% -10.4% $27,721 127.7% $35,407
20743 Capitol Heights Washington-Arlington-Alexandria, DC-VA-MD-WV 22 19.5% -18.9% $97,371 119.9% $116,764
         

Averages from these top 10 zip codes for biggest average percentage return on flips:

  • Average of 17 flips during the fourth quarter
  • Average flip share of 12 percent of all single family home sales
  • Average increase of 3 percent in share of flips from a year ago
  • Average purchase price of $66,695
  • Average gross profit of $99,419 and average gross return of 150.9 percent

Zips with biggest annual increase in Q4 flips in Seattle, Atlanta, New York, Chicago, L.A.
Among zip codes with at least 10 single family home flips completed in the fourth quarter of 2014, the top 10 with the biggest year-over-year percentage increase in the share of flips were in the following metropolitan statistical areas: Seattle, Atlanta, New York, Chicago, Los Angeles, Denver, Cincinnati, Sandusky, Ohio, and Akron, Ohio.

                 
Zip Code City MSA Q4 2014 Home
Flips
Pct of
Total
Sales
YoY Pct Change Avg
Purchase
Price
Avg
Gross
ROI
Flipping
Avg Gross
Profit
98155 Seattle Seattle-Tacoma-Bellevue, WA 11 8.4% 815.3% $249,375 54.0% $134,738
30252 Mcdonough Atlanta-Sandy Springs-Marietta, GA 15 8.6% 520.7% $143,171 36.6% $52,463
11746 Huntington Station New York-Northern New Jersey-Long Island, NY-NJ-PA 12 5.6% 460.6% $303,100 20.3% $61,500
60473 South Holland Chicago-Naperville-Joliet, IL-IN-WI 13 14.8% 446.6% $76,375 112.8% $86,125
92677 Laguna Niguel Los Angeles-Long Beach-Santa Ana, CA 12 8.2% 417.8% $712,889 15.6% $111,278
30093 Norcross Atlanta-Sandy Springs-Marietta, GA 11 17.7% 396.8% $79,433 27.0% $21,467
80241 Denver Denver-Aurora, CO 11 8.3% 395.8% $237,766 20.9% $49,614
45240 Cincinnati Cincinnati-Middletown, OH-KY-IN 11 15.3% 381.3% $74,937 70.6% $52,913
44089 Vermilion Sandusky, OH 11 13.4% 369.5% $72,333 116.5% $84,233
44221 Cuyahoga Falls Akron, OH 12 11.7% 327.2% $69,412 71.0% $49,270
         

Averages from the top 10 zip codes for biggest annual increase in the share of flips:

  • Average of 12 flips during the fourth quarter
  • Average flip share of 11 percent of all single family home sales
  • Average increase of 453 percent in share of flips from a year ago
  • Average purchase price of $201,879
  • Average gross profit of $70,360 and average gross return of 54.5 percent

Metros with highest share of fourth quarter flips
Among metropolitan statistical areas with at least 50 single family home flips in the fourth quarter, those with the highest share of flips as a percentage of total single family home sales were Miami (11.0 percent), Memphis (10.7 percent), Tampa (10.5 percent), Palm Bay-Melbourne-Titusville, Florida (10.1 percent) and Deltona-Daytona Beach-Ormond, Florida (10.0 percent).

Metros with highest gross returns on fourth quarter flips
Among metropolitan statistical areas with at least 50 single family home flips in the fourth quarter, those with the highest average gross percentage return on flips were Flint, Michigan (73.5 percent gross return), Pittsburgh (68.2 percent), Clarksville, Tennessee (67.0 percent), Baltimore (64.0 percent), and Chattanooga, Tennessee (63.4 percent).

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 third quarter where a previous sale on the same property had occurred within the last 12 months.

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