US went flipping crazy in 2017, lending at 10-year high

by Steve Randall09 Mar 2018

There was a lot of flipping in 2017 with 207,088 single-family homes and condos flipped nationwide, 5.9% of all homes sold.

It was a 1% rise in flipping year-over-year and meant an 11-year high in volume terms, and 4-year high in share of sales, according to a report from ATTOM Data Solutions.

There was also a 10-year high in the number of entities doing the flipping; a total of 138,410 individuals or institutions, up 4% from 2016.

Despite the rise, ATTOM’s senior economist Daren Blomquist says that, rather than mirroring the frenzy of just over a decade ago, this was more considered.

"Flippers are behaving more rationally, as evidenced by average gross flipping returns of 50% over the last three years compared to average gross flipping returns of just 31% between 2004 and 2006 — the last time we saw more than 200,000 home flips in consecutive years,” he said.

Financing for flips up 27%
Lenders financed $16.1 billion of home flip purchases in 2017, up 27% from 2016 to the highest level since 2007 — a 10-year high.

Flipped homes originally purchased by the investor with financing represented 34.8% of homes flipped in 2017, up from 31.6% in 2016 to the highest level since 2008 — a nine-year high.

In this regard too, Blomquist says that there was a more responsible tone.

“While financing for flippers has become more readily available in recent years, 65% of flippers still used cash to buy homes flipped in 2017, nearly the reverse of 2004 to 2006, when 63% of flippers were leveraging financing to buy," he said.

The average gross flipping profit of $68,143 in 2017 represented an average 49.8% return on investment, down from an all-time high average gross flipping ROI of 51.9% in 2016 but still the second highest average gross flipping ROI of any year as far back as any data is available (2000).

Top markets for flipping
Among 52 metro areas analyzed in the report with at least 1 million people, those with the highest home flipping rate in 2017 were Memphis, Tennessee (12.8%); Las Vegas, Nevada (9.1%); Tampa-St. Petersburg, Florida (9.0%); Birmingham, Alabama (8.6%); and Phoenix, Arizona (8.5%).

However, for the best ROI, the top markets (with at least 200,000 population and at least 100 flips in 2017) were: Scranton, Pennsylvania (168.2%); Pittsburgh, Pennsylvania (145.5%); Baton Rouge, Louisiana (122.9%); Philadelphia, Pennsylvania (115.7%); and Erie, Pennsylvania (114.1%).


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