More House Flippers Are Emerging
“After faltering in late 2014, home flipping has been gaining steam for the last year and a half thanks to falling interest rates and a dearth of housing inventory for flippers to compete against,” says Daren Blomquist, senior vice president at RealtyTrac. “While responsible home flipping is helpful for a housing market, excessive and irresponsible flipping activity can contribute to a home price pressure cooker that overheats a housing market, and we are starting to see evidence of that pressure cooker environment in a handful of markets.”
Despite a 20 percent jump in activity in the first quarter, home flipping remains near its historic norm.
“Home flippers in most markets appear to be behaving rationally and responsibly,” Blomquist says. “In the first quarter, 71 percent homes flipped were purchased by the home flipper with cash — compared to only 37 percent who purchased with cash at the height of the flipping boom. Spending their own money rather than other people’s money is keeping flippers conservative. On average they are buying the homes they flip at a 27 percent discount below full market value and selling them at a 6 percent premium above full market value, helping to deliver strong flipping returns on average.”
Home flipping in the first quarter reached new all-time highs in several markets, including Baltimore, Md.; Buffalo, N.Y.; Huntsville, Ala.; New Orleans, La.; and York-Hanover, Pa.
Overall, the markets with the highest share of flipping activity in the first quarter were:
- Memphis, Tenn.: 13.3%
- Clarksville, Tenn.: 12.5%
- Deltona-Daytona Beach-Ormond Beach, Fla.: 11.8%
- Fresno, Calif.: 11.3%
- Visalia-Porterville, Calif.: 11.1%
- Tampa, Fla.: 10.8%
- Las Vegas: 10.3%
- Virginia Beach: 9.9%
- Miami: 9.5%
- Jacksonville, Fla.: 9.4%
Source: realtormag.realtor.org
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