LOS ANGELES (CBSLA.com) — The market for house flipping - where a home is purchased and subsequently sold again within 12 months — could be cooling in Southern California, according to data released Thursday.
KNX 1070's Ed Mertz reports an upward trend in prices and lighter inventory means 'For Sale' signs are hanging a bit longer then they were last year.
It now takes property owners on average 185 days to flip a house, an increase of 52 days from 2012, according to RealtyTrac's Q3 2014 U.S. Home Flipping Report.
The Los Angeles metro area ranked second among U.S. metro areas with the most flips in the third quarter at 1,170, behind only Miami, which saw 1,190 flips. Phoenix, New York and Tampa rounded out the rest of the top five cities.
Among the top five, however, Tampa was the only to post an increase in the share of home flips compared to a year ago, according to RealtyTrac vice president Darin Bloomquist.
The average gross profit for property flippers in the L.A. area is over $137,000, a drop of about $5,000 from last year, according to Bloomquist, who said investors are migrating towards the more expensive properties and away from more moderately-priced homes.
"There's even fewer properties available at the high end and it is for the brave of heart, because you do have to sink a lot of money into that up front to get that reward at the back end," said Bloomquist.
The best returns on homes flipped in the third quarter were on homes with a flipped sale price between $1 million and $2 million, yielding a 45 percent average gross return on investment, according to RealtyTrac's data.
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