Home flipping finance volume increased in the first quarter of 2017 to its highest point in nine years, according to ATTOM Data Solutions, a multi-sourced property database.
The number of homes flipped in the first quarter dropped as 43,615 single-family homes and condos were flipped, or sold in an arms-length transfer for the second time within a 12-month period. This is a decrease of 8% from the previous quarter and 6% from last year to the lowest number of homes flipped since the first quarter of 2015.
Home flips made up 6.7% of all single-family home and condo sales during the quarter, up from 5.8% in the previous quarter and unchanged from last year.
Of the single-family homes and condos flipped in the first quarter of 2017, 33.3% were bought using financing, up from 31.9% in the fourth quarter and from 29.5% last year. This represents the highest level since the third quarter of 2008’s 37.6% of home flips that were bought using financing.
“The business of financing for home flippers continued to grow in the first quarter of 2017 even as the home flipping rate plateaued compared to a year ago and average home flipping returns decreased for the second consecutive quarter,” ATTOM Senior Vice President Daren Blomquist said.
“Home flippers financed an estimated $3.5 billion in purchases for homes flipped during the quarter, up from $3.3 billion in the previous quarter and up from $2.4 billion a year ago to the highest level since the fourth quarter of 2007 — a more than nine-year high,” Blomquist said.
Among 85 metropolitan statistical areas with at least 90 competed home flips in the first quarter of 2017, the market with the highest share of homes purchased using financing was Colorado Springs, Colorado with 69.3%. This was followed by Denver, Colorado at 54.8%, Seattle, Washington with 51.6%, Boston, Massachusetts with 51.3% and Providence, Rhode Island with 47.3%.
“Seattle has such a high number of flippers who are financing their purchases relative to the U.S. as a whole due to escalating home prices in our region,” said Matthew Gardner, Windermere Real Estate chief economist. “The decision to finance is proof that these flippers believe the risks of financing are low due to our booming housing market.”
“While the number of home flippers across the nation is not growing, the opposite is true in Seattle,” Gardner said. “The demand for homes in our market is extremely competitive and this is enabling flippers to still see a return, even amidst rising home prices.”