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SD house flippers averaged $113,800 in '13

San Diego house flippers grossed an average of $113,800 per home in 2013, according to real estate firm Redfin.

In San Diego, home flippers in Poway walked away with the biggest gains, with an average gain of $144,700 from a flip.

The average pre-flip price was $400,900 and the average post-flip price was $545,600.

A flip was defined as a home that was purchased and then sold again within 12 months.

Nationwide, homes were flipped for an average of $90,200 per home in 2013, up from $71,800 in 2012, and from a peak of $82,800 during the last housing boom.

In 11 of the markets analyzed, the average gain from a flipped home was well over $100,000.

San Francisco (average gain of $194,600), Long Island ($152,500) and San Jose ($152,000) were the three markets where home flippers saw the highest gains.

On the other end of the spectrum, home flippers in Atlanta and Las Vegas saw average gains of $50,200 and $53,000, respectively.

Gains in home prices have created opportunities for flippers, but the number of homes being flipped is nowhere near the volume of 2005, which was the peak flipping year at 101,800 homes.

The largest volume of house flips since the bust occurred in 2012, at 75,500 across Redfin markets.

“In 2005, homebuyers could easily access zero-down financing, which led to heightened activity from amateur investors who bought several homes without any upfront costs, and who planned to resell them at a profit,” said Nela Richardson, Redfin chief economist.

“When the market crashed, those buyers were left in a lurch. Today, with low inventory, high demand and stricter mortgage standards, flippers are largely developers, corporate investors and all-cash buyers who are experienced and can act quickly to snatch up properties with flip potential.

"High demand and low inventory have also limited the ability of average homebuyers to use sweat equity to renovate a property over several years and make a longer-term financial investment in a home,” Richardson said.

In 2013, 77 percent of homes that were purchased and sold again within 12 months were sold for a gain, while in 2008 roughly the same percentage were sold at a loss. In 2008, only 24 percent of flipped homes were sold for a gain.

“People see house flipping shows on TV and think it looks easy, but it’s always way more work and time than they anticipate, and there is a ton of risk inherent in house flipping,” said Redfin agent Al Medina.

“It takes an experienced eye to determine a proper scope of work and even with that there may be some unforeseen expenses.

Rehabs can range from basic improvements, such as painting, re-carpeting, and updating kitchen and baths to full gut jobs, which can range anywhere from $60 to $120 per square foot,” he said.

Many home flippers before the housing bust were individuals hoping to capitalize on huge price gains leading up to 2006. By 2008, the majority of flippers were banks, who have since reduced their inventory of distressed housing.

In 2013, bank real estate owned (REO) properties fell to their lowest levels since the foreclosure crisis, according to data provider CoreLogic. (NYSE: CLGX).

In 2013, only 35.2 percent of house flips in these markets were lender-owned (REO), compared with 72.2 percent in 2008.

This year, lender REOs are up 15 percent, signaling that they may be more active participants in the flipping market in the second half of 2014.

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