High-End Home Flipping Up 34 Percent Annually in Third Quarter Even as Overall Flipping Decreases 13 Percent

Flipping Centered in Four Coastal California Markets Along with New

Former Flipping Hot Spots
Phoenix, Tampa and Orlando See Marked Slow

IRVINE, Calif. – Oct. 17, 2013
RealtyTrac® (www.realtytrac.com), the
nation’s leading source for comprehensive housing data, today released its Q3
2013 Home Flipping Report, which shows 32,993
single family home flips — where a home is purchased and
subsequently sold again within six months — in the third quarter of 2013, down
35 percent from the second quarter and down 13 percent from the third quarter
of 2012.

The report also shows that real
estate investors made an average gross profit of $54,927 on single family home
flips in the third quarter. That was up 12 percent from an average gross return
of $48,893 in the third quarter of 2012.

The higher gross
profit was driven in part by an increase in high-end flips on homes that were
sold by flippers for $750,000 or more. A total of 968 high-end homes nationwide
were flipped in the third quarter, down 13 percent from the previous quarter
but up 34 percent from a year ago. More than three-fourths of all high-end
flips were in five markets: the New York metro area and four coastal California
markets — Los Angeles, San Francisco, San Jose and San Diego.  Flips
on homes priced between $1 million and $2 million increased 42 percent year
over year, while flips on homes priced between $2 million and $5 million
increased 350 percent year over year.

“Increasing home
prices over the past 18 months combined with decreasing foreclosures have
created a market less favorable to the high quantity of middle- to low-end
bread-and-butter flips that we saw late last year and early this year,” said
Daren Blomquist, vice president at RealtyTrac. “But the sharp rise in high-end
flipping indicates there is still good money to be made for flippers willing
and able to take on the additional risk of buying and rehabbing more expensive
homes. With that higher risk also comes the potential for higher reward. The
average gross profit on each high-end flip equals more than four times the
average gross profit on each flipped home in the lower price ranges.

U.S. Home Flipping by Price Range

The number of single family homes flipped in the third quarter decreased from the previous quarter and a year ago nationally, but flipping numbers were still up from a year ago in some markets such as Los Angeles (11 percent increase), New York (14 percent increase), Detroit (13 percent increase), Atlanta (32 percent increase), Las Vegas (9 percent increase) Chicago (28 percent increase) and Seattle (23 percent increase).

Meanwhile home flipping decreased substantially from a year ago in several former flipping hot spots such as Phoenix (37 percent decrease), Tampa (47 percent decrease), Orlando (28 percent decrease), and Stockton, Calif. (down 37 percent).

Broker and Flipper perspectives
“We’ve seen a noticeable decrease in the number of flipped homes throughout central Ohio in the third quarter,” said Michael Mahon, executive vice president/broker of HER Realtors, covering the Cincinnati, Columbus and Dayton, Ohio markets.  “The decrease is likely due to increasing rental rates and a decrease in the overall supply of REOs being released on the market.”

“As rent and home prices escalate and the number of available REOs continue to decline there are fewer people who are buying homes to flip.  House flippers are kind of a misnomer as they’ve turned into what I like to call ‘holders’,” said Sheldon Detrick, CEO of Prudential Detrick/Alliance Realty covering the Oklahoma City and Tulsa markets.  “Being a house flipper meant buy it, paint it, sell it.  Now it’s turned into buy it, paint it, rent it, and hold it.”

“Many of the urban flipping hot spots such as Los Angeles, New York and Atlanta have many areas in disrepair with low-priced inventory, making flipping an attractive option. Additionally, home price increases coupled with fewer foreclosures are creating a shortage of inventory with enough spread for profitable flipping,” said Doug Clark, star of Spike TV’s Flip Men. “The continued slow pace of new home construction has created a gap in the inventory today’s buyers desire.  They want more modern homes with the latest features, and the new home builders aren’t meeting the demand.  Flippers can often incorporate these features and get them into the pipeline very quickly.”

Top 15 Markets for Flipping in Q3 2013

Report methodology
analyzed sales deed data and automated valuation data for this report. A single
family home flip was any transaction that occurred in the third quarter where a
previous sale on the same property had occurred within the last six months. To
determine the top 15 markets for profitable flipping, RealtyTrac narrowed the
metro list to only those with at least 100 flips in the third quarter and where
flipping had increased from the previous year sorted by total gross profit, in
descending order.

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Report Order

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our Data Licensing Department at 800.462.5193 or datasales@realtytrac.com.

RealtyTrac Inc.

RealtyTrac (www.realtytrac.com) is the
nation’s leading source of comprehensive housing data, with more than 1.5
million active default, foreclosure
auction and bank-owned
properties, and more than 1 million active for-sale listings on its website,
which also provides essential housing information for more than 100 million
homes nationwide. This information includes property characteristics, tax
assessor records, bankruptcy status and sales history, along with 20 categories
of key housing-related facts provided by RealtyTrac’s wholly-owned subsidiary,
RealtyTrac’s foreclosure
and other housing data are relied on by the Federal Reserve,
U.S. Treasury Department, HUD, numerous state housing and banking departments,
investment funds as well as millions of real estate professionals and consumers,
to help evaluate housing trends and make informed decisions about real estate.


Jennifer Von Pohlmann
ext. 139

949.502.8300, ext. 268

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