Fewer Investors Flipping Houses in the US



An article in Propertywire shows fewer investors in the US are buying a property to sell again within six months. Data from RealtyTrac has revealed 32,993 single-family homes were sold during the third quarter of this year, a decrease of 35% compared to the second quarter, and a decrease of 13% compared to the same period last year.

According to the same report from RealtyTrac, the average gross profit for real estate investors on a single-family home was $54,927 during the first quarter of this year. That’s an increase of 12% compared to the third quarter in 2012 when the average gross return was $48,893. The reason for the increase in profits is being put down to a larger number of high-end properties being sold for $750,000 or more. During the third quarter a total of 968 high-end homes were flipped, a decrease of 13% compared to the previous quarter, but a massive increase of 34% compared to last year.

© Stuart Miles - Fotolia.com

© Stuart Miles – Fotolia.com

More than 75% of these high-end flips took place in five particular markets in the US which were San Jose, San Diego, San Francisco, Los Angeles and New York. The number of homes being flipped and which were priced between $1 million and $2 million has increased by 42% compared to a year earlier, while the increase on the number of homes being flipped priced between $2 million and $5 million was an incredible 350%.

According to the real estate experts fewer homes in the middle and lower-end of the market are being flipped due to the decreasing number of foreclosures and increasing home prices that have created less favorable conditions for investors in this sector. However the increase at the higher end of the market shows this clearly still money to be made for those willing to take on the risk of buying and refurbishing more expensive homes.

Even though the number of single-family homes being flipped has decreased in most markets compared to a year ago, some areas are still bucking this trend. The numbers are up by 23% in Seattle, by 28% in Chicago, bind 9% in Las Vegas, by 32% in Atlanta, by 11% in Los Angeles, by 14% in New York, and by 13% in Detroit. In contrast the amount of home flipping has decreased substantially in markets that were previously hot. These markets include Orlando were flipping is down by 28%, Tampa where it’s decreased by 47%, Phoenix with a 37% decrease and Stockton, California where flipping is down by 37%.

Apparently some of those who used to flip homes are now buying homes to rent out and to hold onto, especially as rental rates are increasing while the supply of foreclosures is decreasing.