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

IRVINE, CA--(Marketwired - Aug 22, 2014) - 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.