Weekend Economists Make War on Charlie Wilson August 22-24, 2014

[xchrom]

50. Home Flipping Wanes as U.S. Investors Find Fewer Bargains

http://www.bloomberg.com/news/2014-08-22/home-flipping-wanes-as-u-s-investors-find-fewer-bargains.html

Home flipping, in which a buyer resells a property quickly for a profit, is on the decline as U.S. residential price gains slow and foreclosures dwindle.

Almost 31,000 single-family houses were flipped in the second quarter, representing 4.6 percent of U.S. home sales, RealtyTrac said in a report today. That’s down from 6.2 percent a year earlier and the smallest share since the first three months of 2012, when prices bottomed after the crash, according to the Irvine, California-based data company, which defines a flip as a property sold within 12 months of purchase.

Real estate investors are making smaller profits and finding fewer opportunities for deals after a two-year surge in property values that’s now slowing. The median existing-home price climbed 4.9 percent in July from a year earlier, compared with a 13.1 percent jump in the same month of 2013, the National Association of Realtors said yesterday. Distressed homes accounted for the lowest share of sales since at least 2008.

“The flippers’ formula is to buy a property that they can add value to at a discount and sell at a premium,” Daren Blomquist, vice president at RealtyTrac, said in a telephone interview. “Now, home-price appreciation has slowed dramatically in many of the flipping meccas and the availability of discounted distressed properties has dried up.”