ZeroHedge article on Flipping

[Judd Campbell]

http://www.zerohedge.com/news/2014-05-01/where-flipping-home-generates-80-profit

See the above link for the graphics.

I still think it is a good time to get in and Kentucky seems to have a good spread for flipping according to their chart.

here is the first section:

Overnight, RealtyTrac released its latest home-flipping report. What it found is that while the latest housing bubble may have indeed popped, manifesting itself not only in a decline in flipping prices but also a tumble in flipping activity across the US as a percentage of all sales from 6.5% a year ago to just 3.7% in Q1, and down from 4.1% last quarter, flipping, where a home is purchased and subsequently sold again within six months, can still be massively profitable, leading to returns that would make the pimpliest 25-year-old, math PhD HFT-firm owner green with envy.

Among the core findings was that the average sales price of single family homes flipped in the first quarter was $55,574 higher than the average original purchase price. That gross profit provided flippers with an unadjusted ROI (return on investment) of 30 percent of the average original purchase price averaged out across the US. The average gross profit per flip a year ago was $51,805 for an unadjusted ROI of 28 percent. However, it is the range that is notable: the flip ROI ranged from -8%, or a loss of $10k on the property, to a gain of 80%, a whopping $144K!

What is just as notable is that while flipping across the US is moderating, in some states it is as high as 12% of all sales activity. And just as notable, in the first quarter a whopping 43% of all flipping sales were to an all-cash buyer - in other words, flipping to other flippers!

“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,” said Daren Blomquist, vice president at RealtyTrac. “But investors appear to have recalibrated their flipping strategy, accounting for the slower home price appreciation even if that means fewer flips."

This can be seen well on the chart below, which shows that while the average flipped price declined modestly to $239K across the US, the reason why the ROI surged is because the average purchase priced tumbled from roughly $240K to just $183K. What this means is that the flipping "sharks" are digging ever deeper into cheaper priced properties with hopes of holding to them then selling them, with or without renovations, to witless "dumber money."