10. Vallejo-Fairfield, Calif.
> Avg. gross profit: $92,538
> Flipped price: $304,346 (14th highest)
> Number of flips: 75
> Change in flips Q2 to Q3: -34%
People who flipped homes in Vallejo in the third quarter of 2013 bought their property for just under $218,000 on average. This was roughly in line with the national average for these purchases. But those sellers received more than $304,000, one of the highest average flip prices in the nation. A flip in Vallejo returned more than $92,000 last quarter, higher than in most markets. Despite their profitability, home flips in Vallejo during the third quarter actually fell by 34% from the previous quarter and by more than 50% from the same quarter of the previous year.
9. Seattle-Tacoma-Bellevue, Wash.
> Avg. gross profit: $97,002
> Flipped price: $319,280 (13th highest)
> Number of flips: 485
> Change in flips Q2 to Q3: -32%
Home prices in Seattle have been rising since early 2012, according to the S&P/Case-Shiller Home Price Index. At the same time, home flips rose considerably, peaking at 711 in the second quarter of 2013. However, in the third quarter, flipping activity declined by nearly a third compared to the previous quarter. Home flipping remained profitable with an average gross profit of $97,002 per home. One reason for the lower activity may be tight real estate market in the area, which reduced the number of opportunities to buy homes to flip. Bloomquist expects inventory to rise.
8. Salinas, Calif.
> Avg. gross profit: $100,228
> Flipped price: $438,333 (7th highest)
> Number of flips: 69
> Change in flips Q2 to Q3: -10%
Salinas, a major agricultural producer, is located in the central coastal region of California. Compared with other housing markets where home flipping is profitable, the number of flips has been relatively low in the past few years. Just 69 homes were flipped in the most recent quarter. Average gross profits from home flipping increased by more than $40,000 when compared with the same quarter last year.
7. Santa Rosa-Petaluma, Calif.
> Avg. gross profit: $113,001
> Flipped price: $411,909 (9th highest)
> Number of flips: 125
> Change in flips Q2 to Q3: -18%
The Santa Rosa-Petaluma area makes up Sonoma County, a major part of California’s Wine Country. Since the start of 2012, home flipping activity has increased, peaking at the end of last year with 197 homes flipped in the fourth quarter. However, activity has declined as of the third quarter of this year. The area remains expensive. While the average purchase price for a home that was later flipped was quite high — nearly $300,000 — the same homes were sold for nearly $412,000 on average, higher than all but eight other cities.
6. San Diego-Carlsbad-San Marcos, Calif.
> Avg. gross profit: $120,180
> Flipped price: $475,306 (5th highest)
> Number of flips: 900
> Change in flips Q2 to Q3: -22%
In recent years, home flipping activity in San Diego has surged. In the first quarter of 2011, just 285 homes were flipped. At its peak, in the second quarter of this year, flips totaled 1,160. But higher prices and higher mortgage rates have removed some of the appeal for buyers in general, according to the San Diego Union-Tribune. Coupled with a decline in the number of available distressed properties, home flipping also may have become less appealing. The number of flipped homes dropped by 22% from the second to the third quarter of 2013. Flipping was still profitable last quarter. The average gross profit on flipped homes was more than $120,000, up from fewer than $89,000 last year.