Modesto's Home Flipping Rate Rises, Bucking National Trend

Flipping is on the rise in some California housing markets, counter to a nationwide trend of declines.

Flipping is when someone buys a home, fixes it up and then resells it within a 12-month period. Daren Blomquist with the research firm ATTOM Data Solutions says the U.S. home flipping rate from April to June fell about 1.5 percent from the previous quarter and was unchanged from a year ago.

"There were a couple of Central California cities that bucked the trend, pretty dramatically actually," says Blomquist.

Including Modesto, which saw a 24 percent increase in flipping rates. Blomquist says that was the eighth-highest rate in the country.

"What's different in Modesto is that there are still lower priced properties available," Blomquist explains. "The average property that flippers are buying in Modesto, they're acquiring it for $185,000 and on average they're selling them for $262,000."

Meanwhile, Fresno had the second-highest flipping rate in the country and Visalia had the 7th.

Fewer real estate investors are flipping Sacramento-area homes. The data show there were 571 homes flipped in the Sacramento metro area between April and June, or about 6 percent of all home sales. Blomquist says that was down six percent from a year ago.

"But one thing we are seeing, the average profits in Sacramento are actually pretty good — 46 percent average gross flipping profit," says Blomquist. "Flippers who completed their flips in the second quarter made $100,000, on average, in gross profit per flip."

He says Sacramento home prices are going up so rapidly that flippers can ride the coat tales of the market's home price appreciation to make their profits. The challenge is finding discounted homes to buy. The median price that flippers are buying in Sacramento is $320,000. Blomquist says flippers typically don't like to purchase homes priced higher than $200,000.

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