Flippers targeting high-end homes from New York to California

Home flipping, in which a buyer quickly resells a property for a profit, is becoming more popular for high-end houses in the United States as deals for cheaper residences slow.

There were 968 single-family houses priced at US$750,000 or more that were sold by flippers in the third quarter, according to RealtyTrac, which defines the transactions as those that occur within six months of the previous purchase. The figure was up 34 per cent from a year earlier, while rapid trades within the broader market fell 13 per cent, the foreclosure-data firm said in a report.

Investors who buy homes and sell them within months are finding they can make more money with houses in higher price ranges from New York to California. Flippers for cheaper homes are facing competition by investors such as Blackstone Group, which are acquiring thousands of single-family homes to turn for letting, while fewer properties are entering the foreclosure pipeline as real estate prices rise and the job market improves.

"There's more opportunity to buy homes at a discount at the higher end," Daren Blomquist, vice-president at RealtyTrac, said. "The flipping frenzy is dying down on the lower end because they're running out of good inventory to buy at a discount."

The average gross profit from flipping a high-end home is more than four times that for a home in the lower range, RealtyTrac said.

Flips jumped 42 per cent in the third quarter for The number homes priced between US$1 million and US$2 million that were flipped in the third quarter rose by 42 per cent, while 350 per cent more homes costing US$2 million to US$5 million were flipped, Trac said. More than three-quarters of all the high-end homes flipped were in five markets: the New York metropolitan area and Los Angeles, San Francisco, San Jose and San Diego in California.