US home flipping hits 10-year high

Flipping of homes in the USA hit a 10-year high in 2016.

Flipping, when a home is sold on at a profit by a buyer within a short period of time of their purchase, is a popular way of investing in real estate, particularly when home values are low and rising quickly.

Data from ATTOM Data Solutions, which operates RealtyTrac.com, shows that 193,009 single family homes and condos were flipped — sold in an arms-length transfer for the second time within a 12-month period — in 2016. The figure is up 3.1 per cent from 2015 to the highest level since 2006, when 276,067 single family homes and condos were flipped.

Home flips in 2016 accounted for 5.7 pe cent of all single family home and condos sales during the year, up from 5.5 per cent in 2015 to a three-year high but still well below the peak in 2005, when 338,207 single family homes and condos were flipped representing 8.2 percent of all sales.

The report also shows that 126,256 entities — including both individuals and institutions — flipped homes in 2016, the highest number since 2007, when 143,266 entities flipped properties.

Meanwhile, the share of flipped homes that were purchased by the flipper 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, as far back as data is available — and the median square footage of homes flipped decreased to 1422 — a new record low going back to 2000.

“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,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “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.”

“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 continues. “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.”

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