But Not Out
According to News.Investors.com, the amount of houses being flipped is down but not completely out, adapting to a changing U.S. real estate market, as opportunity rests directly ahead. Flippers accounted for 4% of single-family home sales in the 3rd quarter, Which is the lowest since 2009, in a RealtyTrac analysis. The 26,947 houses that flippers bought and sold again within a year were mostly under $400,000, and they delivered an average return on investment, absent fix-up costs, of 36%, or $75,990 per home.
Flipping houses dropped, as home-price appreciation in some hot flipping markets cooled down. This brings the proportion of such investors back to its historical norm relative to all homebuyers and sellers, says RealtyTrac Vice President Daren Blomquist. The flippers that have been making money, Blomquist says in his report are the most successful ones "are buying older, outdated homes in established neighborhoods and rehabbing them extensively to appeal to modern tastes."
Markets where there was still older, distressed housing inventory available are where his data showed an increase in flipping. Homes built from 1930 to 1939 had a better gross return, 53%, than those built in any later decade. The 1950s with all its midcentury ranch-house grandeur came in second with a 47% return. While discounted distressed property has become harder to find, Blomquist notes that the next three to six months could provide "more fodder for flippers" because of a recent increase in scheduled foreclosure auctions.
Miami, Fla., had the most flips in the 3rd quarter, 1,190, followed by Los Angeles at 1,170, Phoenix at 1,147 and New York at 1,070. Tampa, Fla., with 789 flips, and was the only one of the five to see an increase in flipping from a year earlier. The highest return on the dollar, or average gross profit, came from pricey locations: San Francisco; San Jose, Calif.; Los Angeles; New York City; Seattle and San Diego. Each yielded an ROI above $125,000 per flip.
It is good to understand that the data looks just at what happened with sales and prices, not how much money the investors poured into fixing a property. And the data captures, along with investors, people for other reasons ended up buying and selling a home within a span of 12 months. Consider the time value of money, too. It took an average of 185 days in the third quarter between a flipper's home purchase and resale.
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