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HIGH-END HOME FLIPPING
ON THE RISE
Real estate investors made an average gross
profit of $54,927 on single-family home flips in the
third quarter, RealtyTrac reported. The tracking
company's data indicates investors' Q 3 profit 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 of homes that were sold for $750,000
or more.
High-end flipping during the July-toSeptember period was centered in four coastal
California markets and New York. At the same
time, the former flipping hot spots of Tampa and
Orlando, Florida, as well as Phoenix saw marked
slowdowns in home flips.
In total, RealtyTrac's home flipping report
shows 32,993 single-family home flips—where a
home is purchased and subsequently sold again
within six months—in the third quarter, down
35 percent from the second quarter and down 13
percent from the third quarter of 2012.
At the high-end of the price spectrum, some
968 homes nationwide were flipped in the third
quarter, down 13 percent from the second quarter
but up 34 percent from the third quarter of last
year. Nationally, flips on homes priced between $1
million and $2 million increased 42 percent yearover-year, while flips on homes priced between $2
million and $5 million increased 350 percent yearover-year. RealtyTrac says more than three-fourths
of all high-end flips were in five markets: the New
York metro area, Los Angeles, San Francisco, San
Jose, and San Diego.
"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, RealtyTrac VP. "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."
Blomquist continued, "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."
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