Reporter- San Francisco Business Times
San Francisco is the best market in the country for flipping a home with an average return of $194,600 — more than double the $90,200 national average.
Redfin, a online real estate brokerage, analyzed homes that were purchased and resold within 12 months known as “flipping” a home. Among the top U.S. cities for flipping, San Jose came in third with an average gain of $152,000 and Oakland ranked fifth with $134,500 in average gains.
The flipping trend came under heat this week in San Francisco, where city officials are looking at increasing taxes on flips of small apartment buildings as a way to curb home prices from skyrocketing and dissuade potential home sellers from evicting renters to make big profits. The prospective law could go before voters in November.
“It’s worth noting that gains are not profits,” stated Redfin in a report on the flipping data. Flippers often upgrade homes to increase their value or in places like San Francisco where the market keeps heating up, they just wait a few months for values to rise and then sell.
As far as Bay Area cities go, Oakland might be the best market for flipping. The average median price for a home in Oakland was $478,000 in May 2014 where as it was $1,015,000 in San Francisco and $605,500 in San Jose, according to Zip Realty, another online brokerage.
Compared with the average flip gain, a flipper could make a 28 percent average return in Oakland verses 19 percent in San Francisco and 25 percent in San Jose.
In San Francisco, the Bayview, Sunset and Visitation Valley emerged as some of the top neighborhoods for flipping. Redfin agent Mark Colwell said he knew of one Bayview property that a buyer snagged for $400,000 and then turned around and sold for $900,000.
“The Bayview is not the highest priced neighborhood, but had the most room to appreciate,” he said. “In terms of price appreciation, it was kind of late to the party.”
Colwell also pointed out that while flipping homes may seem very lucrative, not everyone makes money. Nationwide, about 23 percent of flips sell for less than the original price, but that beats the 2008 average when 76 percent of flips resulted in losses.
“It’s not as risky to flip a home,” Colwell said.
Blanca Torres covers East Bay real estate for the San Francisco Business Times.