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IRVINE, CA-Four of the top five high-end home-flipping metros in the country are in California, and the Los Angeles-Long Beach-Santa Ana metro experienced the highest number of single-family flips during the third quarter of all metros throughout the country, RealtyTrac reports. According to the firm, 2,116 single-family homes were flipped in this market during the quarter—a year-over-year increase of 11%—with an average gross profit of $127,634.
The increase in this metro bucks the overall national trend in home-flipping, which decreased 35% from the second quarter and 13% from the third quarter 2012. However, the average gross profit made by flippers nationally on single-family properties increased from $48,893 a year ago to $54,927 in Q3 2013.
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, the firm reports. 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.
“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,” says Daren Blomquist, VP of RealtyTrac. “But the sharp rise in high-end flipping indicates that 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.”
As GlobeSt.com reported last week, Oregon, Nevada and California made locally based RealtyTrac's list of states with the top-10 highest REO increases during third quarter, the firm reports. While US bank repossessions decreased 24% from a year ago, they were up 7% from the previous quarter.
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