RealtyTrac: Home flips increasingly rare in housing market
Posted on Monday, March 2, 2015 at 8:22:40 AM
Following the Great Recession, home flipping - or buying a cheap property, making strategic upgrades and selling for a profit - was a common part of the housing market.
A key reason was the high foreclosure rate. These distressed homes made for fantastic flips, but that isn't the case anymore. According to Black Knight Financial Services, foreclosure inventory is down 31 percent from January 2014 to January 2015. The residential financing delinquency rate dropped by 11 percent during that time.
Overall, this trend and several others have contributed to the declining popularity of home flipping. RealtyTrac reported that only 5.4 percent of all single-family home sales in 2014 were flipped. This is the smallest amount since 2011.
"Investors have picked much of the low-hanging fruit when it comes to home flipping over the past three years since home prices bottomed out in the first quarter of 2012," explained Daren Blomquist, vice president at RealtyTrac.
RealtyTrac also found that several areas were still hotspots for home flipping. Those locations included Detroit, Los Angeles, Miami and San Diego, among others. However, potential flippers have to be cautious about what properties they choose, as it is harder to sell for a profit in today's market.