By Steve Milne
Investors aren’t flipping as many Sacramento homes as in previous years.
Flipping is when a home buyer -— typically an investor — rehabs a property and puts it back on the market within a 12-month period.
“In Sacramento, we saw almost 2,200 properties that were flipped during the year,” said Daren Blomquist with the research firm ATTOM Data Solutions.
Those 2,200 properties made up 6.5 percent of all housing sales, a little higher than the national average. But it was a 2 percent decline from the previous year.
“In Sacramento that’s declining because the market is somewhat tapped out in terms of the deals that are available for home flippers,” Blomquist said.
In other words, flippers are competing against a large number of regular home buyers. As a result, flippers are being forced to pay more, which cuts into potential profits.
ATTOM Data Solutions also looked at the average purchase price discount that flippers are getting when they acquire properties.
“In Sacramento, that was only a 16 percent discount, which may sound like a lot,” Blomquist said. “But nationwide we saw an average 25 percent discount for flippers acquiring properties. And so that thinner discount translates into lower profits for home flippers.”
Home-flipping profits are getting squeezed by a dwindling inventory of distressed properties available to purchase at a discount.
Flipping peaked in Sacramento in 2005, when more than 4,500 homes were flipped.
Nationwide, more than 200,000 homes were flipped in 2017, an annual increase of 1 percent.