The rate of home flipping has increased on a year-over-year basis for a dozen consecutive quarters; however, investors have been going about the process differently since 2002, real estate analytics firm CoreLogic reported.
“By the fourth quarter of 2018, the flipping rate in the U.S. reached 10.9 percent of all home sales – the fourth highest rate since we started keeping track in 2002,” the company wrote. “The flipping rate in the fourth quarter of 2018 was also the highest rate for any fourth quarter in our flipping data series.”
Instead of speculating on areas that will see home value appreciation, short-term investors are now focused on adding value to homes before flipping it, CoreLogic found. By combining public records data and its big data platform, CoreLogic can estimate the discount a flipper received on a property when they bought it, and the premium they earned when they sold relative to similar properties that weren’t flipped by investors, the company said.
“Just like we found that flippers were likely relying on price speculation from 2002 to 2007, we also find that they weren’t particularly good at buying properties at a discount or selling them at a premium relative to other non-flipped but sold properties during the same time period,” CoreLogic wrote. “Since then, 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. This is yet more evidence that flipping today is less risky and less speculative than during the 2000s.”
CoreLogic found that the Sunbelt — largely the southern part of the United States — has the fastest growing rates of flipping. Conversely, the Northeast and parts of the Midwest saw the lowest rates.
Here are metros with the highest average flipping rates in the fourth quarter of 2018.
- Birmingham, Alabama — 16.5 percent
- Memphis, Tennessee — 16.2 percent
- Tampa, Florida — 15.1 percent
- Las Vegas, Nevada — 15 percent
- Camden, New Jersey — 14.9 percent
- Phoenix, Arizona — 14.8 percent
- Palm Bay, Florida — 14.1 percent
- Philadelphia, Pennsylvania — 14 percent
- Lakeland, Florida — 13.9 percent
- Atlanta, Georgia — 13.8 percent
Here are metros with the lowest average flipping rates in the fourth quarter of 2018.
- Austin, Texas — 4.3 percent
- Bridgeport, Connecticut — 4.4 percent
- Hartford, Connecticut — 5.1 percent
- New Haven, Connecticut — 5.3 percent
- Houston, Texas — 5.9 percent
- Springfield, Massachusetts — 6.2 percent
- Pittsburgh, Pennsylvania — 6.3 percent
- Kansas City, Missouri/Kansas —6.5 percent
- Elgin, Illinois — 6.5percent
- Kenosha County, Wisconsin — 6.6 percent