House flippers in the Charlotte region saw decreases in their gross profits and returns on investment in the fourth quarter when compared with the third quarter.
The average gross profit for the Charlotte-Concord-Gastonia metropolitan statistical area was $41,678 in the fourth quarter, down from was $63,201 in the third quarter. However, the latest results are up from $22,586 in the second quarter and $34,101 a year ago, according to real estate data and analytics provider RealtyTrac.
In a separate report recently released, RealtyTrac ranked Gaston County among the top 10 most profitable safe havens for single-family residential investment. The company looked at employment rates, risk and potential for double-digit gross annual yields. It said that in Gaston County, the average rent is estimated to increase 2.19 percent from 2014 to 2015, and that Gaston County properties could provide annual gross yields of 13.86 percent.
There were 280 flips in the Charlotte region during the fourth quarter, accounting for 4.4 percent of total single-family home sales. The share of flips increased 7 percent from the third quarter and 4 percent from a year ago.
The average return on investment was 33.6 percent, down from 36 percent in the third quarter but up from 13 percent in the second quarter and 25.1 percent a year ago. RealtyTrac defines a flip as a home that is purchased and resold within a year.
Nationally, there were 32,578 flips in the latest quarter, comprising 5.3 percent of sales. As a share of sales, flips rose 11 percent from the third quarter but fell 12 percent from a year ago.
Investors still made good money, though, with an average gross profit of $65,993 – a 37.1 percent return on the initial investment, excluding rehab costs and other expenses. That was an increase from an average gross profit of $65,285 in the third quarter, when the average return on investment was 36.5 percent. In the fourth quarter of last year, the average return on investment was 36.4 percent and gross profit was $63,017.
For the year, 136,268 U.S. homes were flipped, accounting for 5.4 percent of all single-family sales. That was the lowest share of flips since 2011.
“Investors have picked much of the low-hanging fruit when it comes to home flipping over the past three years since home prices bottomed out in the first quarter of 2012,” said Daren Blomquist, vice president at RealtyTrac. “As home price appreciation slows to single digits in most markets, flippers need to be more selective and creative about the properties and neighborhoods they target.”
Metro areas with the greatest share of flips among total sales were Detroit; Los Angeles; Memphis; Miami; and Jacksonville and Tampa, Florida.
The best rates of returns were found in Baltimore; St. Louis; Jacksonville, Florida; Chicago; Detroit and Washington, D.C.