US ‘next generation’ online real estate brokerage Redfin has released research which shows ‘home flips’ saw an average increase of $102,400 from purchase to sale price although overall, flipping activity is on the decline.
The report also reveals neighborhoods in Washington DC and Los Angeles are among the hottest for flipping.
Redfin crunched the numbers all the way back to 2001 to see how flippers fared before and after the housing bust.
The research provides a ranking of the country’s 10 hottest neighborhoods for flipping gains, led by Petworth in Washington DC and Mount Washington in Los Angeles.
For its analysis, Redfin defined a flip as a home that was purchased and then sold again within 12 months for at least 10 per cent more than the original purchase price.
Overall the figures show home flippers realized more gains on their flips in 2015 than ever before: $102,400 per flip on average, up from $98,500 in 2014 and far higher than the peak of $90,900 during the last housing boom.
While big gains in home prices have created big opportunities for flippers in 2015, the number of homes being flipped was relatively low.
The report estimates 43,000 homes were flipped in 28 Redfin markets last year, nowhere near the volume of 2005, which was the peak year on record at 95,000 homes.
Market and Neighborhood Highlights:
The hottest neighborhoods for flips, based on average gains were Petworth in Washington DC ($337,000), Mount Washington ($312,000) and Silver Lake ($307,000), both in Los Angeles.
Rounding out the top-five hottest neighborhoods were Brookland in Washington DC ($290,000) and North Sunnyvale in San Jose ($268,000).
Among metro areas, San Francisco was the most lucrative flipping market in 2015, with an average gain of $216,000 per home, followed by San Jose ($174,800) and Long Island ($152,600).
The smallest flipping gains in 2015 were seen in Las Vegas ($53,600) Atlanta ($68,500) per home, and Raleigh-Durham ($71,400).
When calculating the average gain compared to the original purchase price, flippers in Philadelphia, Chicago and Baltimore fared well.
Gains in those cities were 73 per cent, 70 per cent and 6 per cent higher than the original purchase price.
Redfin serves more than 80 major metro areas across the US. The company has closed more than $31 billion in home sales says it has saved customers more than $335 million in fees (and counting).