Home-flipping: How the Sacramento area compares to other markets

Though the activity is far from as prevalent as four years ago, more than one in every 20 home sales in the Sacramento region last year is still considered a flip.

According to new research from Trulia, a combination of rising home prices and a stronger labor market have helped push home-flipping numbers to their highest levels in a decade. Approximately 6.1 percent of all home sales in 2016 qualified as a “flip,” defined as the purchase of a house at a market rate and the subsequent sale of the same property at a higher price due to improvements or short-term pricing gains. That figure marked a near percentage-point increase over the 5.3 percent rate recorded in 2015.

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Nationally, Sacramento ranked 28th last year, compared to other metropolitan areas, in the percentage of flip transactions out of home sales overall. That was .3 percentage points down from a year earlier, and 2.5 percentage points below the peak in 2013. At that time, the housing crash resulted in empty, abandoned homes in the region, drawing investors who repaired and then sold them again. That activity drove up home prices overall to create fewer bargains in the market, which in turn created less incentive for flipping.

More recently, real estate agents are seeing flipping on a localized basis in neighborhoods such as Sacramento’s Oak Park and West Sacramento’s Bryte. Because of their proximity to more expensive neighborhoods and other amenities, more buyers are looking for turnkey homes in such neighborhoods.

Trulia’s data indicates that flipping saw particular gains in markets hard-hit by the past decade’s housing downturn as well as in distressed cities where home values are far below national averages. For example, Las Vegas — among the markets stung by the foreclosure crisis that unfolded alongside the recession — saw 10.5 percent of all home sales qualify as flips. Close behind were Florida’s Daytona Beach area (9 percent of all sales) and Tampa (8.4 percent), which also saw prices plummet.

The data ranked Las Vegas as the top flipping city in the country, with 10.5 percent of all transactions last year defined as such. Fresno, at 6th with 8.2 percent, was the highest ranked California city.

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Much of the flipping activity recorded in 2016 appears to stem from a near-nationwide jump in home prices. Trulia’s research indicates that average home prices increased in all but one — Hartford, Connecticut — of the 100 U.S. metros analyzed in its flipping report. Some 44 of those housing markets saw percentage gains of at least 5 percent during the 12-month span analyzed.

Trulia said 2016’s flip ratio was the highest on record since 2006, when home prices reached peak levels in many U.S. metros and when 7.3 percent of all sales qualified as flips.

Article and images provided by: Sacramento Business Journal
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