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RealtyTrac: Investors Flipping Fewer Sacramento Area Homes

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New real estate data show investors are flipping fewer homes in the Sacramento area. 

Flipping is when an investor buys a home, usually a foreclosure, makes some improvements and then resells the property, all within a 12-month period.

Research firm RealtyTrac says 6.8 percent of all Sacramento area home sales in 2015 were flips, which is above the national average of 5.5 percent.

"However, we're seeing that number go down," says RealtyTrac's Daren Blomquist. "The share of flips is down 13 percent year over year in Sacramento."

Blomquist says flipping hit it's peak in the Sacramento area at 12 percent in 2010.

"It's come down from there," says Blomquist, "and it's now almost half of that as the number of distressed properties fades in Sacramento."

In other words, investors have fewer foreclosures to flip.

The data show investors who did flip a Sacramento area property last year realized a gross profit, on average, of $74,000. That represents a return on investment of 38 percent which is below the national average of 45 percent.

Blomquist says Sacramento is bucking the national trend, where flipping increased in 75 percent of U.S. markets. He also says flippers who buy a property nationwide are getting a 26 percent discount up front, on average, when they purchase that home.

"In Sacramento that discount is only 17 percent, which is still a discount," says Blomquist. "But because of the competitive market, the lack of distressed inventory, on average flippers in Sacramento just aren't able to find the deep discounts that investors in some other markets are finding."

The statistics show flippers were busy in Nevada last year.

"It was the state with the highest share of home flips nationwide," says Blomquist.

He says nearly 9 percent of all Nevada homes sales last year were flips. That's relatively unchanged from the year before. But Blomquist says it's about 3.5 percent higher than the national average.

"However, when we look at Nevada we're not back to the flipping frenzy that we saw 10 years ago," says Blomquist. "The share of flips in Nevada are still 34 percent below what they were 10 years ago ."

In California, 6.5 percent of all home sales in 2015 were flips; an annual drop of 14 percent.