High-End Home Flipping Up 34%, But Overall Trend is Down in 3Q

High-End Home Flipping Up 34%, But Overall Trend is Down in 3QHome flipping is still going relatively strong in this housing recovery, despite higher interest rates, higher home prices and an overall decline in transactions.
But high-end flipping, where investors turn around and sell within six months for $750,000 or more, is
making the biggest gains and boosting overall profits, according to RealtyTrac’s just-released update.
In the third quarter, 32,993 single-family homes were flipped — purchased and subsequently sold again
within six months. That’s down 35 percent from the second quarter and down 13 percent from the third quarter of 2012.
But the report also shows that real estate investors made an average gross profit of $54,927 on single family home flips in the third quarter. That was up 12 percent from an average gross return of $48,893 in the third quarter of 2012.
The higher profit was fueled by the high-end flippers.
A total of 968 high-end homes nationwide were flipped in the third quarter, down 13 percent from the previous quarter but up 34 percent from a year ago.
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.
Flips on homes priced between $1 million and $2 million increased 42 percent year over year, while flips on homes priced between $2 million and $5 million increased 350 percent year over year.
“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, vice president at RealtyTrac.
But the sharp rise in high-end flipping means there is still healthy profits to be made for flippers willing and able to take on the additional risk of buying and rehabbing more expensive homes, Blomquist said.
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.
High-End Home Flipping Up 34%, But Overall Trend is Down in 3Q

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