Home Flipping Jumps to Six-Year High, Fueled by More Lending Options

A total of 51,434 U.S. single family home and condo sales were bought, updated and “flipped” in a resale during the second quarter of 2016.

That’s up 14 percent from the previous quarter and up 3 percent from a year ago to reach the highest number of home flips since the second quarter of 2010 — a six-year high, according to the latest update on home flipping from ATTOM Data Solutions, the parent company of RealtyTrac.
A total of 39,775 investors — both individuals and institutions — completed at least one home flip in the second quarter of 2016, the highest number of home flippers since the second quarter of 2007 — a nine-year high.
A big factor in the uptick is an increasing number of lending options for both beginners and veteran flippers, in addition to average mortgage rates that have remained below 4 percent for months.
“Home flipping is becoming more accessible for smaller operators thanks to an increasingly competitive lending environment with more loan options for real estate investors, who are also benefiting from the historically low mortgage interest rates,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “That favorable lending environment for flippers has helped to fuel the recent flipping frenzy we’ve seen over the past five quarters.
Homes flipped in the second quarter of 2016 accounted for 5.5 percent of all single family and condo sales, down from 6.7 percent of all sales in the first quarter — but up from 5.4 percent of all sales in Q2 2015.
A home flip is defined as a property that is sold for the second time within a 12-month period based on publicly recorded sales deed data collected by ATTOM Data Solutions in more than 950 counties — accounting for more than 80 percent of the U.S. population.
Should it be a concern that home flipping is reaching milestones not seen since before the financial crisis? There are a couple of key differences in the home flipping of 2016, compared to 2006 when home flipping peaked during the last housing boom, Blomquist said.
“First, home flippers are realizing a much bigger gross ROI in 2016, averaging 49 percent in the first two quarters compared to an average gross ROI of just 27 percent in 2006,” he said. “Second, while an increasing number of flippers are financing their purchases, more than two-thirds are still using cash to purchase compared to about one-third using cash to purchase back in 2006.”

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