the property’s after repair value). The average gross flipping profit of $55,000 in 2015 represented an average gross return on investment (ROI) of 45.8 percent, up from 44.2 percent in 2014 and up from a 35.3 percent in 2005. The annual peak in average gross flipping ROI was 2013 at 46.0 percent. The average gross ROI is the gross profit expressed as a percentage of the original purchase price. HIGHESTAVERAGE GROSS FLIPPING PROFITS, ROI Among 110 metro areas with at least 250 flips in 2015, those with the highest average gross flipping profit in dollars in 2015 were San Francisco ($145,000); San Jose, Calif. ($145,000); New York ($120,000); Los Angeles ($115,000); and Oxnard-Thousand Oaks-Ventura, Calif. ($110,000). Markets with the highest average gross ROI on homes flipped in 2015 were Pittsburgh (129.5 percent); New Orle- ans (99.2 percent); Philadelphia (98.4 percent); Cincinnati (89.7 percent); and New Haven, Conn. (89.6 percent). Markets with the biggest increase in average flipping gross ROI in 2015 compared to 2014 were Boise, Idaho (85 percent increase); Hartford, Conn. (51 percent increase); Ocala, Fla. (49 per- cent increase); Homosassa Springs, Fla. (41 percent increase); and Huntsville, Ala. (39 percent increase). STATESWITHHIGHEST SHARE OF HOME FLIPS States with the highest share of flips in 2015 were Nevada (8.8 percent), Florida (8.0 percent), Alabama (7.4 percent), Arizona
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of homes flipped in 2015 was above 2005 levels in 12 of the 110 metro areas (11 percent) analyzed in the report, including Pittsburgh (19 percent above 2005 levels); Memphis (18 percent above 2005 levels); Buffalo, N.Y. (12 percent above 2005 levels); San Diego (4 percent above 2005 levels); Se- attle (4 percent above 2005 levels); Birming- ham, Ala. (4 percent above 2005 levels); and Cleveland (3 percent above 2005 levels). “When home flipping numbers go up, it is usually an indication that the housing market is in trouble,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market, where the share of homes flipped in 2015 was down from 2014 despite being above 2005 levels. “The problemwith a rise in home flipping is that these sales artificially inflate home prices, making housing even less afford- able for buyers and increasing the risk of a bubble. I’m happy to see that the percentage of home flipping sales in Seattle does not exceed the national average and that they’re down from a year ago. This makes sense given our affordability constraints and lower potential for profits for home flippers.” BIGGESTYEAR-OVER-YEAR INCREASES Metro areas with the biggest year-over- year increase in share of flips were Lakeland, Fla. (up 50 percent); New Haven, Conn.
(up 45 percent); Jacksonville, Fla. (up 41 percent); Homosassa Springs, Fla. (up 40 percent); and Akron, Ohio (up 37 percent). “We continue to see distressed proper- ties funnel through the pipeline in South Florida, which makes it ripe for investors to profit in a strong selling market,” said Mike Pappas, CEO and president at the Keyes Company, covering the South Florida market. “There are always sellers who will discount for a quick cash sale and open the door for astute investors to make a good return by repositioning the property.” The Miami metro area had the most homes flipped of any market nationwide in 2015, with 10,658, representing 8.6 percent of all Miami-area home sales for the year and up 4 percent as a share of all sales from 2014. AVERAGE GROSS FLIPPING PROFITAT 10-YEAR HIGH Homes flipped in 2015 yielded an av- erage gross profit of $55,000 nationwide, the highest average gross profit for homes flipped nationwide since 2005, when the average gross profit on flipped homes was $58,750. The average gross flipping profit is the difference between the purchase price and the flipped price (not including rehab costs and other expenses incurred, which flipping experts estimate typically run between 20 percent and 33 percent of
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