Real Estate Fix and Flip Statistics
The fix and flip market refer to investors that purchase homes at low prices (either due to foreclosure, or a house requiring a lot of work) and then invest money into “fixing” the home. The investment money can take the form of new appliances, flooring, yard work, etc. Once the home is renovated, the fix and flip investor then sells the home on the market, ideally making a tidy profit. When assessing the viability of the fix and flip market, there are many statistics that can be used to show the health of the market. In this article, we’ll be reviewing seven statistics and the outcomes that they measure.
Here are the fix and flip statistics that we’ll be reviewing in this article:
- Property flip lending volume in 2019-2020 was at a 12 year high
- 2020 is 38.7% ROI on the home flipping rate, a 9 year high
- Avg. time to flip in TN is 147 days, in MD its 198 days
- Average Gross Flipping ROI in Tennessee is 79% vs 131% in Pittsburgh, PA.
- Foreclosure rate in 2019 was.36%
- Proeprty flips in 2020-2019 is 8% lower than in 2018-2019
- Median Sale/Purchase Price is up 83% in Columbus, Georgia and up 47% in San Antonio, Texas
- Average Homeownership Rate is 64.2 percent (down from 69.20 percent in 2004)
- Home Flip Lending VolumeThe home flip lending volume statistic is measuring the amount of financing available in the fix and flip market. Financing means loans/private equity on the table. As the real estate market (and thus the “fix and flip” market) has grown, the home flip lending volume has also increased, hitting a 12 year high in 2019. Home flipping equity used to be dominated by Freddie Mac (a quasi-governmental organization) but has expanded to the private sector in recent years. As fix and flip investing has become more popular more private equity has become available to flippers.
- Home Flipping RateThe home flipping rate statistic measures the percentage of all home sales that come from the flipping market. For example, if there are 100,000 homes sold in the US each year and 7,500 of those homes are sold in a “flip”, then the home flipping rate would be 7,500/100,000 or 7.5%. The home flipping rate measures how many investors are moving into the fix and flip market. A higher home flipping rate could indicate the presence of larger private real estate firms beginning to invest in real estate.
- Average Gross Flipping ROIThe gross flipping ROI measures the percentage of an original investment that is made back in profit. If a home is originally purchase for $100,000 and the gross profit on the flip is $40,000 the gross flipping ROI is 40%. As with the “average time to flip” statistic, the “average” part of the average gross flipping ROI can be shown across any dimension (location, season, type of house, etc.). For example, the average gross flipping ROI in Tennessee is 79% vs 131% in Pittsburgh, PA.
- Foreclosure Rate The foreclosure rate statistic measures the percentage of homes that file for foreclosure. A high foreclosure rate can signal an opportunity for “fix and flip” investors in the foreclosure market since foreclosure houses can often be bought at a large discount. The foreclosure rate peaked after the 2009 housing crash and has decreased steadily in the years since.
- Median Sale/Purchase Price The median sale and purchase prices measure the median price that a flipped home is either purchased or sold. Relatively self-explanatory, using the median of a purchase or sale price has one distinct advantage over using the average purchase or sale price. The average price of purchase/sale is more impacted by outliers in the data (extremely expensive/inexpensive homes) than the median price. Median can give a better indicator of the overall health of the flipping market.
- Average Homeownership Rate The average homeownership rate statistic measures the percentage of the population that owns a home. When the homeownership rate is lower, there are fewer potential buyers in the market, meaning that fix and flip members may struggle to find buyers for their fixed-up home. A low homeownership rate could also indicate the presence of larger real estate investors in the market who can swallow large numbers of properties.
- Average Time To Flip The average time to flip statistic measure the number of days that pass between the purchase and sale of a flipped home. This statistic can be used to project when revenue will hit the books. The “average” can be taken across any dimension including the state where the flip is occurring, the type of home being flipped, or the season when the home is flipped. For example, the average time to flip in the state of Tennessee is 147 days, while the average time to flip in the state of Maryland is 198 days.