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What does the latest home flipping data reveal about the housing market now?

Around $3.5B in house flips were financed in the first quarter of 2017. However, how they are being acquired and who is buying them may be changing this year.

Financing is Coming Back

Home flippers are increasingly using financing to make acquisitions instead of cash. We are now seeing the most home flips being financed since 2008. Almost $1B more than in the first quarter of 2016. Yet, this is less than half the volume as in 2005. This is probably in large part due to the availability of new financing for real estate investors, as well as the large amounts of capital placed into equity into the rental property market over the past few years.

Hot Housing Markets

Top markets where house flippers are using financing in 2017 include:

  • Colorado Springs
  • Denver
  • Seattle
  • Boston
  • Providence

States with the highest percentage of flips include:

  • DC
  • Nevada
  • Alabama
  • Tennessee
  • Maryland
  • Missouri

Big Profits

Average gross returns for house flippers in Q1 2017 were at 47.4% according to RealtyTrac, at an average of $64,284 per unit. The most profitable markets by ROI this year have been PA, OH, LA, NJ, and OK.

While 11% of houses flipped between January and March 2017 were by investors who completed more than 10 flips during those 90 days, 69% were by investors who did just one transaction in the quarter. This suggests a continuing trend in new house flippers coming into the market.

Around a quarter of house flips are being sold to cash buyers this year, with around 20% of the total going to home buyers using FHA loans. ATTOM Data reports the average home flipped has dropped to the smallest square footage on record, with the median year built of these properties being 1978.

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund

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