Home-flipping activity cooled in California to its lowest level since 2003, according to a report by HomeSmartReports.com, a real estate information company.
The company reports sales of homes owned for six months or less as a gauge of “flipping,” or possibly speculative buying and selling activity.
Homes owned for six months or less accounted for 3.2 percent of all home resales in 2006, compared with 4.2 percent in 2005 and 3.6 percent in 2004, the company announced. In 2003 it was 2.4 percent.
Flipping activity was highest in Kern (4.7 percent) and Riverside (4.3 percent) counties in 2006, and lowest in Napa County (1.9 percent) and in rural Sierra foothill counties.
Corona’s 92880 ZIP code had the highest flipping rate in the state at 12.9 percent, followed by Playa Vista’s 90094 ZIP code at 12.3 percent and San Jacinto’s 92582 ZIP code with 12.2 percent, according to the report.
In Colusa County, flipping activity fell from 4.7 percent in 2005 to 1.1 percent in 2006. Flipping activity also dropped significantly in Placer County, from 5.1 percent in 2005 to 2.1 percent in 2006; and in Santa Barbara County, from 3 percent in 2005 to 1.4 percent in 2006.
When factoring in commissions and costs, 24.9 percent of the last year’s “flip” sales resulted in a loss for the seller, the highest percentage since 25.2 percent during 2002, the company reported. Overall, flippers sold the homes for a median $45,000 more than they paid, compared with $52,000 in 2005. Profits would be lower if there were improvement costs, the report notes.
“Speculators pulled back from a real estate market where home values have largely leveled off, and chances for quick turnaround and profit are receding,” according to the announcement by HomeSmartReports.com.
Mike Ela, HomeSmartReports.com president, said in a statement, “Speculative buying and selling of homes contributes to market volatility and risk, all part of that ‘bubble’ theory people were talking about. Lending institutions measure risk and volatility, homeowners and buyers would also do well to keep an eye on them in addition to watching the ups and downs of their local prices and sales.”