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Increasing Numbers In Luxury Fix and Flips
October 29th, 2013 10:36 AM

According to data from RealtyTrac, fix and flips are increasing due to the rising home prices nationally, especially in the higher end markets. 

As a whole, single family flips have decreased about 13% in third quarter of 2013, however exponential growth is happening in markets where home prices exceed $750,000.  Likewise, investors are still averaging about $55,000 in profit per flip nationally in the 3Q, according to RealtyTrac.

The data showed that homes flipped above $750,000 increased in quantity by 34%.  Homes that were flipped in the $1 million to $2 million range increased by 42%, and homes that were flipped from $2 -5 million showed a whopping 350% increase in the third quarter.

Walt Molony, spokesman for the National Association of Realtors, NAR, said to the Wall Street Journal’s, Market Watch, “We’ve seen a notable increase in sales of properties costing $1 million or more.”

According to NAR, sales of million dollar homes increased year over year by 33% from August 2012 to August 2013.  When compared to the overall portion of the market these sales accounting for 2.4% of all home sales nationally in 2013 as opposed to only 1.8% the year before. 

Property data firm, DataQuick reported a 37% increase in multi-million dollar home sales for just the first half of 2013, hitting numbers that haven’t been seen since 2007.

You might be thinking what is driving these numbers up? Well, according to Daren Blomquist of RealtyTrac, it’s a combination of the rising prices in the market, the decrease in foreclosures, and the dwindling shadow inventory that has reduced much of the, what he likes to call,  “mid-to-low-end bread-and-butter flips.”

Based on numerous other articles recently published, much of the mid-to-low-end market has been gobbled up by private institutionalized investment firms.

“We have definitely seen a steady decrease in the pace at which investors are buying at the foreclosure auctions due to lenders that have increased their opening bids.  It almost appears as a mad dash to the finish line to get the last few properties.  So all evidence seems to be signaling that most of ‘low hanging fruit’ has been acquired,” said Benjamin De Los Monteros of Cherry Picker Investments in Chicago.


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Posted by Michael Hobbs on October 29th, 2013 10:36 AMPost a Comment

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