Blomquist: u201cInvestors appear to have recalibrated their flipping strategy.u201d<@SM>Home-flipping patterns swing wildly, with Phoenix taking the lead as the US market with the highest percentage of flips almost consistently.<@SM>The greatest percentage of US home flips as a segment of all home sales in first-quarter 2014 occurred in the $100,000-$300,000 price range, while the lowest percentage occurred in the above-$750,000 market. ***Charts courtesy of RealtyTrac.


IRVINE, CA—The incidence of home flipping nationwide is decreasing at the same time as average gross returns are rising. According to a report from RealtyTrac, 3.7% of all US single-family home sales in Q1 were flips—defined as home that were purchased and subsequently sold again within six months—which is down from 4.1% in the fourth quarter of 2013 and down from 6.5% in the first quarter of 2013.

On the “flip” side, the average sales price of single-family homes flipped in the first quarter was $55,574 higher than the average original purchase price, the report says. That gross profit provided flippers with an unadjusted ROI of 30% of the average original purchase price. The average gross profit per flip a year ago was $51,805 for an unadjusted ROI of 28%.

According to Daren Blomquist, VP of RealtyTrac, “Slowing home-price appreciation early this year in many of the most-popular flipping markets put some investors in danger of flying too close to the sun. But investors appear to have recalibrated their flipping strategy, accounting for the slower home-price appreciation even if that means fewer flips. This is another good sign that this housing recovery is behaving much more rationally than the last housing boom, which was built largely on unfounded speculation rather than fact-based calculations.”

As reported in February, the incidence of US home flipping increased 16% in 2013, and average gross profit on flips rose to more than $62,000, according to RealtyTrac. A total of 156,862 single-family homes were flipped last year, up 116% from 2011.