2013 Was Record House-Flipping Year
Mar 12th, 2014 @ 12:36 PM by Amber Nelson
With home prices rising so quickly last year, the number of flipped homes in 2013 hit a record high, according to housing data firm RealtyTrac.
Last year, there were 156,862 U.S. homes flipped – those bought and resold within six months for a higher price – a 16 percent increase from 2012 and a 114 percent gain from 2011. Flipped homes represented 4.6 percent of all homes sales in 2013, up from 4.2 percent in 2012 and 2.6 percent in 2011.
“Strong home price appreciation in many markets boosted profits for flippers in 2013 despite a shrinking inventory of lower-priced foreclosure homes to purchase,” said Daren Blomquist, vice president of RealtyTrac in a statement . “For the year 21 percent of all properties flipped were purchased out of foreclosure, but that is down from 27 percent in 2012 and 32 percent in 2011. Meanwhile flipped homes were still purchased at an average discount of 13 percent below market value in 2013, the same average discount as 2012, indicating that investors are finding discounted buying opportunities outside of the public foreclosure process — particularly in those markets with the biggest increases in flipping for the year.”
Profits for flipping were also up in 2013. The average gross profit rose to $58,081, up from $45,759 in 2012. Part of that gain in profits was due to a decrease in flip time. In 2013, it took an average of 84 days to complete a flip – from the time a house was bought to the time it resold – down from 86 days the year before and down from 100 days in 2011.
This year, house flipping may continue to grow, but it may be among homes in the higher prices ranges. In 2013, the largest jumps in flipping across the country were for home that resold above $400,000, with a 36 percent increase from 2012. There was only a 17 percent increase in flips among homes that resold below that price point. As home price appreciation grows at a slower rate this year, flippers may continue to find deals on larger homes as the inventory of smaller foreclosures dwindles.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.