Housing Bubble Deja Vu: Home Flippers Are Making a Killing

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The health of the housing market is a controversial topic these days. Home prices have rebounded sharply from their worst levels of the financial meltdown, but low inventory and massive intervention from the Federal Reserve have distorted the longer-term picture. Adding to the noise, home flippers are making a killing in real estate, bringing back memories of the housing bubble.

Home flippers — people who purchase a home and sell it again within six months — averaged a gross profit of $58,081 per home flip in the United States last year, according to a new report from RealtyTrac. This represents a 27 percent increase from $45,759 in 2012 and nearly four times the profit seen in 2011. The average gross profit for homes flipped in the fourth quarter was $62,761.

“Strong home price appreciation in many markets boosted profits for flippers in 2013 despite a shrinking inventory of lower-priced foreclosure homes to purchase,” said Daren Blomquist, vice president of RealtyTrac, in a press release. “For the year, 21 percent of all properties flipped were purchased out of foreclosure, but that is down from 27 percent in 2012 and 32 percent in 2011. Meanwhile flipped homes were still purchased at an average discount of 13 percent below market value in 2013, the same average discount as 2012.”

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