IRVINE, CA—Markets with certain supply-and-demand traitsare more ideal for flipping homes than thosewithout these traits, RealtyTrac'sVP Daren Blomquist tells GlobeSt.com. As werecently reported,according to RealtyTrac's latestbuy-to-rent analysis and buy-or-rent analysis onthree-bedroom residential properties in 285 counties nationwide,potential returns from buy-to-rent purchases of these properties inthe first five months of 2015 decreased from the same time period ayear ago in 59% of the 285 counties analyzed. We spoke exclusivelywith Blomquist about what factors lead to rent vs. purchaseaffordability in various markets and what circumstances causeflipping to be more profitable than a buy-to-rentstrategy.

GlobeSt.com: What drives a market to be moreaffordable to rent than buy, and viceversa?

Blomquist: Itreally comes down to supply and demand on both sides of theequation. In more densely populated areas, we tend to see rentingis more affordable because space is at such a premium that itpushes prices out of reach of the median income earner. Rents canstill be high in those areas, but they are more affordable thanbuying and don't require a down payment, which,when we're talking about markets like San Francisco County, wherethe average price of a three-bedroom home is $1.5 million, is avery substantial amount of money. On the other side, markets withmore space and available supply of single-familyhomes and condos will not have so muchupward pressure on home prices. Another demand factor here isoutside investors from other states or other countries. In marketsthat attract those types of buyers, we tend to see upward pressureon prices—and from buyers who are typically not as constrained byincome and affordability concerns.