Flipping homes is on the wane, according to a report out Thursday from real estate research firm RealtyTrac.
Data for the first quarter show that 3.7% of all U.S. single family homes were flipped or bought and sold within six months. That's down from 6.5% a year earlier and 4.1% in the fourth quarter.
But the average gross return edged up slightly to 30% from 28% a year earlier.
Investors appear to have "recalibrated their flipping strategy" downward to account for slower home-price appreciation, said Daren Blomquist, RealtyTrac's vice president: "This is another good sign that this housing recovery is behaving much more rationally than the last housing boom, which was built largely on unfounded speculation rather than fact-based calculations.
Flipping was down year over year in a number of markets that saw some of the sharpest price declines from the last boom, including Phoenix (down 39%), Riverside-San Bernardino, Calif. (down 22%), Atlanta (down 57%) and Las Vegas (down 9%).
Still, Phoenix and Riverside-San Bernardino were among metro areas with the highest volume of flips in the first quarter, with 894 and 627 flips, respectively. Other high-volume flipping markets were New York (1,791), Los Angeles (828) and Miami (749). The data do not include condos.
Dallas, Houston and Seattle had double-digit, year-over-year gains in flipping as a share of all sales, up 28%, 29% and 19%, respectively.
Of all properties flipped in the first quarter, 82% were sold to owner-occupants, RealtyTrac said. Some 43% were all-cash sales.
Wesley Hardin, a Denver-area broker with Re/Max (RMAX) Alliance, cited a drop in overall inventory for slowing flipping activity.
And Chris Pollinger, senior VP of sales at First Team Real Estate in Southern California, said flippers "are having to dig deeper into a new pool of inventory as the market surges.
"The affordable properties have quickly disappeared, pushing flippers into higher-priced properties with better margins and longer carry times," he said in the RealtyTrac release.