10 most popular markets for home flipping

Even as home-flipping activity has generally declined in the past year, it continues to be quite widespread in parts of the country. In some counties, home flippers still buy large numbers of properties to renovate and resell at a potentially significant profit.

There were 22 U.S. counties that had at least 1,000 home flips each in the 12 months between April 2013 and March 2014. Among these, 10 counties had more than 1,500, while Suffolk County, New York, had more than 7,000 in that time. Based on recently released data from home data site RealtyTrac, 24/7 Wall St. determined the 10 counties with the highest number of home flips. (Click here or on the photo above to see those markets with the most flips.)

In parts of the U.S. where home flipping is common, there is often a strong investor presence, Daren Blomquist, vice president at RealtyTrac, told 24/7 Wall. St. Additionally, many of these areas have “low inventory of new homes for sale, combined with a lot of older inventory of existing homes.” These two factors, combine to create a distinct niche for recently flipped properties.

Indeed, many of the most popular counties for home flipping were located in metro areas where flips still accounted for a large percentage of sales. In the New York, Jacksonville, and Omaha metro areas, home flips accounted for more than 10% of all sales — among the higher percentages in the nation.

The size of the county also plays a role in driving home flip totals, since a higher number of residents generally indicates a larger housing market. All but one of the 10 counties with the most flips were among the nation’s 100 largest by population. Additionally, six were among the 15 most populous counties nationwide.

Flippers aim to enter “markets at or near the bottom to maximize profits from flips,” Blomquist said. “The data suggests these markets are primed for a strong rebound, and some are already in the process of rebounding.” It is hardly a coincidence that the principal counties of the Las Vegas and Phoenix metro areas, as well as a number of counties in recession-battered southern California, were among the most popular for flippers.

In many of these markets, buyers were often willing to pay quite a bit of money for a property. In some instances, these markets are flirting with becoming unaffordable for many buyers, Blomquist noted, adding “these high-priced markets also present an opportunity for flippers to provide properties at a lower price point that appeals to more buyers.”

For instance, buyers in Los Angeles County spent 7.8 times their estimated median household income to buy a home. In San Diego County, buyers spent 6.6 times estimated income. Both were among the highest ratios in the nation. Similarly, ratios were also high in Riverside and San Bernardino counties, two of the hardest hit by the recession.

However, just because these counties were popular with home flippers does not mean they were highly profitable places to renovate a distressed home. Gross return figures, measured by the differences between the purchasing price flippers paid and the selling price they received, varied considerably among the counties with the most home flips.

For example, flippers in Suffolk County had an average gross return of 53.5%, among the higher returns in the nation. Returns were also high in Oakland County, Michigan and San Bernardino County, California. However, while figures in San Bernardino were high, in neighboring Riverside County — also a high flip area — the average flip returned just 30.5%, lower than in many other U.S. counties.

Based on data provided by RealtyTrac, 24/7 Wall St. identified the 10 counties with the most home flips between April 2013 and March 2014. RealtyTrac also provided data on the average purchase and sales prices, and gross return on investment, for home flips. Gross return figures do not include the costs of renovating properties for resale. Additionally, we reviewed RealtyTrac data on median home price, median household income (forecast for 2014 based on rates of change from 2006 to 2014), unemployment, and the percentage change in foreclosures between the first quarter of 2013 and 2014. Quarterly figures on home flips by metro area are also from RealtyTrac. Home Price Index data from S&P/Case-Shiller was also utilized for certain cities.

Click here or on the photo above to see the 10 most popular markets for home flipping.

And to see the 10 best markets for home flipping, visit 247WallSt.com: