Flipping Homes to Increase as Prices Rise

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IRVINE, CA-Locally based supplier of real estate data RealtyTrac Inc. has released the top 20 markets throughout the country for flipping homes. The firm's research ranked Orlando, Las Vegas and Phoenix on the top of the list, with Vallejo, CA; Denver; and Detroit rounding out the bottom.

Also included in the top 25 were several Western markets including Tucson; San Diego; San Jose; Sacramento; San Francisco; Ventura County, CA; Inland Empire; Modesto, CA; Santa Rosa, CA; Bakersfield, CA; Seattle; and Stockton, CA.

To create the list, RealtyTrac looked at more than 600 metro areas nationwide where flips of single-family homes occurred in 2012. A flip was considered a situation where a sale of a home occurred within six months or less of the previous sale of the same home. From the 600 metros, the firm narrowed it down to metros with at least 500 flips during the year, and then to metros with at least a 9% annual increase in home values between first-quarter 2012 and first-quarter 2013. From that group of markets, the top 25 were selected based on the gross profit as a percentage of the original purchase price.

According to Daren Blomquist, VP of RealtyTrac and author of the report, flipping homes—which is defined as buying, rehabbing and reselling for profit, usually within about 90 days—will likely become more favorable investors in 2013 as home prices are expected to continue climbing. “And while buying homes as rentals still offers a solid rate of return in many markets, even buy-and-hold investors typically flip properties periodically to fund their ongoing rental purchases.”

As GlobeSt.com reported last month, US properties foreclosed in the first quarter took an average of 477 days to complete the foreclosure process, up from 414 days in the previous quarter and up from 370 days in the first quarter of 2012, according to RealtyTrac.

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**Charts courtesy of RealtyTrac.