Homes were flipped for more money in 2013 than ever before: $90,200 per home on average, up from $71,800 in 2012 and from a peak of $82,800 during the last housing boom. Redfin (www.redfin.com), the customer-first real estate brokerage, crunched the numbers all the way back to 2001 to see how flippers fared before and after the housing bust, and found that they have fared particularly well lately. For this analysis, we defined a flip as a home that was purchased and then sold again within 12 months.
While big gains in home prices have created big opportunities for flippers in 2013, the number of homes being flipped was nowhere near the volume of 2005, which was the peak flipping year at 101,800 homes. The largest volume of house flips since the bust occurred in 2012, at 75,500 across Redfin markets.
“In 2005, homebuyers could easily access zero-down financing, which led to heightened activity from amateur investors who bought several homes without any up-front costs and who planned to resell them at a profit,” said Nela Richardson, Redfin chief economist. “When the market crashed, those buyers were left in a lurch. Today, with low inventory, high demand and stricter mortgage standards, flippers are largely developers, corporate investors and all-cash buyers who are experienced and can act quickly to snatch up properties with flip potential. Unfortunately, high demand and low inventory have also limited the ability of average homebuyers to use sweat equity to renovate a property over several years and make a longer-term financial investment in a home.”
Even though fewer houses were flipped last year than in the three previous years, the success rate has been higher. In 2013, 77 percent of homes that were purchased and sold again within 12 months were sold for a gain, while in 2008 roughly the same percentage were sold at a loss. In 2008, only 24 percent of flipped homes were sold for a gain.
Market and Neighborhood Highlights:
- San Francisco was the most lucrative flipping market in 2013, with an average gain of $194,600 per home, followed by Long Island ($152,500) and San Jose ($152,000).
- The smallest flipping gains in 2013 were seen in Atlanta ($50,200 per home), Las Vegas ($53,000) and Charlotte ($53,100).
- The hottest neighborhoods for flips, based on average profits, were Petworth in Washington, D.C. ($313,400), Beaumont in Portland, Oregon ($285,600), and Brookland, also in Washington, D.C. ($271,900).
- Rounding out the top five hottest neighborhoods were Mid-City ($239,900) and Mount Washington ($236,300), both in the Los Angeles area.
For the analysis, Redfin looked at homes that were bought and sold again within 12 months and compared the difference between the two sale prices.
To read the full report, complete with charts and market breakdowns, please visit: http://www.redfin.com/research/reports/special-reports/2014/whats-up-with-the-flipping-market.html.
Connect with Redfin
Redfin (www.redfin.com) is a customer-first real estate brokerage that represents people buying and selling homes. Founded and run by technologists, Redfin has a team of experienced, full-service real estate agents who are advocates, not salespeople, earning customer-satisfaction bonuses, not commissions. Redfin.com features all the broker-listed homes for sale, as well as for-sale-by-owner properties that don't pay brokers a commission. Redfin also offers online tools that make the entire process of buying or selling a home easier and more fun. The company serves major markets across the U.S. and has closed more than $13 billion in home sales. In 2012, Redfin was named one of The DIGITAL 100: World's Most Valuable Private Tech Companies by Business Insider.
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Rachel Musiker, 206-588-6863