Home-Flipping Jumps to 11-Year High in 2017

Mike Sorohan msorohan@mba.org

March 08, 2018

More than 207,000 U.S. single-family homes and condos flipped in 2017, the highest level since 2006, said ATTOM Data Solutions, Irvine, Calif.

The company's Q4 and Year-End 2017 U.S. Home Flipping Report said 207,088 flips took place in 2017, up by 1 percent from 2016, representing nearly 6 percent of all single-family homes and condo sales during the year, from 5.7 percent in 2007, the highest level since 2013. ATTOM said more than 200,000 homes flipped for the second straight year.

The report also noted $16.1 billion in financed flips took place in 2017, up by 27 percent from 2016 to a 10-year high. ATTOM said 138,410 entities (individuals and institutions) flipped homes in 2017, up 4 percent from the 133,407 in 2016 to the highest level since 2007.

"The surge in home flipping in the last three years is built on a more fundamentally sound foundation than the flipping frenzy that we witnessed a little more than a decade ago," said Daren Blomquist, senior vice president with ATTOM Data Solutions. "Flippers are behaving more rationally, as evidenced by average gross flipping returns of 50 percent over the last three years compared to average gross flipping returns of just 31 percent between 2004 and 2006--the last time we saw more than 200,000 home flips in consecutive years."

Blomquist added while financing for flippers has become more readily available in recent years, 65 percent of flippers still used cash to buy homes flipped in 2017, nearly the reverse of 2004 to 2006, when 63 percent of flippers were leveraging financing to buy.

Other report highlights:

--Flipped homes originally purchased by the investor with financing represented 34.8 percent of homes flipped in 2017, up from 31.6 percent in 2016 to the highest level since 2008. Among 52 metropolitan statistical areas analyzed in the report with at least 1 million people, those with the highest percentage of 2017 completed flips purchased with financing were Denver (55.4 percent); Boston (52.8 percent); Providence, R.I. (49.4 percent); San Diego (48.5 percent); and Seattle (48.0 percent).

--17.6 percent of flipped homes in 2017 were sold to FHA borrowers--likely first-time homebuyers--down from 19.4 percent in 2016 to a three-year low.

--Among metros with at least one million people, those with the highest share of completed flips sold to all-cash buyers in 2017 were Providence (43.1 percent); Birmingham, Ala. (42.8 percent); Oklahoma City, Okla. (41.0 percent); Orlando (40.4 percent); and San Antonio (38.0 percent).

--Completed home flips in 2017 yielded an average gross profit of $68,143, up 5 percent from an average gross flipping profit of $64,900 in 2016 to a record high for as far back as data is available (2000). This represented an average 49.8 percent return on investment (percentage of original purchase price), down from record average gross flipping ROI of 51.9 percent in 2016 but still the second highest average gross flipping ROI of any year as far back as any data is available (2000).

--Among metros with at least one million people, those with the highest home flipping rate in 2017 were Memphis, Tenn. (12.8 percent); Las Vegas (9.1 percent); Tampa-St. Petersburg (9.0 percent); Birmingham (8.6 percent); and Phoenix (8.5 percent).

--Homes flipped in 2017 took an average of 182 days to complete the flip, tied with 2016 for the highest average days to flip since 2006.

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