More consumers are flipping homes again, but investors are acting differently than they did during the housing boom. Short-term investors are focusing more on adding value than speculating on prices, according to a new report from CoreLogic, a real estate data firm. CoreLogic defines a home flip as the purchase of a property with the intent to sell within a two-year period for profit.
The U.S. flipping rate was 10.9 percent of all home sales in the fourth quarter of 2018. Flipping rates vary significantly across the country and tend to be highest in Sun Belt metros and lowest in the Rust Belt metros, with some exceptions. Eight of the top 10 metros with the highest flipping rate in the fourth quarter of 2018 were in the Sun Belt region, with Birmingham, Ala., Memphis, Tenn., and Tampa, Fla., leading the pack. Two of the top 10 were also in the Rust Belt—Camden, N.J., and Philadelphia.
CoreLogic reports the metros with the highest average flipping rates, as of the fourth quarter of 2018:
- Birmingham, Ala.: 16.5% (flipping rate)
- Memphis, Tenn.: 16.2%
- Tampa, Fla.: 15.1%
- Las Vegas: 15%
- Camden, N.J.: 14.9%
- Phoenix: 14.8%
- Palm Bay, Fla.: 14.1%
- Philadelphia: 14%
- Lakeland, Fla.: 13.9%
- Atlanta: 13.8%
On the other hand, the metros with the lowest average flipping rates were Austin, Texas; Bridgeport, Conn.; and Hartford, Conn.
Flipping is becoming less risky, the report notes. Flippers are focusing on adding value to the properties they buy before reselling. Further, “we’ve seen growing signs that flippers are getting increasingly good at buying properties at a discount while the premium they’re selling for has remained mostly constant,” the report notes. “This is yet more evidence that flipping today is less risky and less speculative than during the 2000s.”
The metros with the highest median returns on a flip are:
- Detroit: 95.9% (flipping return)
- Philadelphia: 92.8%
- Pittsburgh: 75%
- Cleveland: 70%
- Akron, Ohio: 65.7%
- Baltimore: 63.6%
- Buffalo, N.Y.: 62.3%
- Wilmington, Del.: 60.1%
- Toledo, Ohio: 59.4%
- Milwaukee: 58.9%
Source: “Special Report: House Flipping and Profits,” CoreLogic Insights (April 9, 2019)
