Home flippers got busy in 2015.
Across the United States, 179,778 single-family homes and condos were flipped last year, accounting for 5.5 percent of all sales, according to a new survey. It was the first yearly increase in the share of homes flipped since 2010.
And guess where flippers earned the highest gross profit per flip? Correct: In the San Jose and San Francisco metropolitan areas, where flippers averaged $145,000 per flip, topping the list of 110 metro markets studied.
“That’s a big take-home,” said Daren Blomquist, senior vice president at RealtyTrac, the real estate information company that crunched the numbers. The Bay Area’s high housing costs and supertight inventory make it “hard to flip in those markets,” he said. “But for those who are successful, you get a big bang for your buck.”
At the bottom of the list was Detroit, where each flip reaped an average $22,000 profit: “You’d have to do about seven flips in Detroit to equal one flip in the Bay Area,” Blomquist said.
RealtyTrac, which specializes in tracking distressed properties, defines a flip as a home that’s bought and sold within a 12-month period.
In terms of the volume of flips, the Bay Area was low on the list: only 822 properties were flipped in Contra Costa County, 780 in Alameda County, 712 in Santa Clara County, 241 in San Mateo County and a mere 163 in San Francisco.
Hot sales states included Nevada (where flips represented 8.8 percent of all sales) and Florida (8 percent). Targeting areas with plenty of distressed homes — foreclosed or in bad shape — flippers were especially busy in cities including Memphis (11.1 percent of all sales) and Fresno (9.2 percent).
Markets with the highest average gross return on investment for flips were clustered in the Rust Belt, with Pittsburgh, topping the list with returns of 129.5 percent.
Overall, flipping increased in 75 percent of the markets studied. The number of individual flippers completing at least one home flip last year was 110,008, the highest number since 2007. That’s an indication, Blomquist said, of “widespread confidence in the housing market which is leading small investors to jump into the risky endeavor of house flipping.”
Still he noted that “flipping is one of those things where it’s good in moderation.”
Although flippers can fix up distressed homes and add value to neighborhoods, he said, there is “definitely such a thing as too much flipping that dominates a market and creates its own momentum that’s not based on real value. It’s based on speculation. As we see flipping rise, that is one concern that comes to mind.”