Further indicating the once hot California market has tipped, property flipping in the Golden State dipped to its lowest level in more than three years and in some major regions, profits slipped through the fingers of more than half the flippers.
It's a sign speculators are shipping out and investors who want to realize a decent return had better get a grip for the long haul.
During the second quarter this year, 2.4 percent of the existing homes sold statewide had been owned for six months or less, down from 3.5 percent during the second quarter in 2005, according to HomeSmartReports.com , a San Juan Capistrano, CA-based real estate sales, value and risk analyst.
That was the lowest level of flipping since the first quarter of 2003, when it was also 2.4 percent. Flipping recently peaked in California during the first quarter of 2005 when 3.8 percent of properties were sold within six months of the purchase.
Statewide, most flippers still made money, a median $44,500.
However, including commissions and sales costs, 24.7 percent of the second quarter's flip sales resulted in a loss. The percentage of flippers who lost money was the highest since 25.8 percent during first quarter of 2002. A year ago only 14.4 percent of flipped sales resulted in a loss.
Among those who lost money in the second quarter this year, the median loss was $30,100. HomeSmartReports did not include in the report a comparative median dollar figure for flipping losses during previous quarters.
"Flipping activity is one of a number of risk factors we look at to see how healthy and stable a local market is, all the way down to the neighborhood level. What we look for when it comes to flipping are the big ups and downs, which can indicate stress," said Mike Ela, HomeSmartReports.com president.
California's housing market isn't as chipper as it once was as low sales and slower appreciation this year stripped away what's left of many sellers' markets. In July, sales decreased 29.9 percent, as the median price of a home in California rose only 5.1 percent from year ago, according to the California Association of Realtors.
CAR also said July came with year-over-year home price decreases in half of the 20 regions it tracks, including a 5.6 percent price decline in Monterey, a 3.7 percent price fall in the Palm Springs/Lower Desert area; a 2.6 percent drop in Santa Barbara County; and a 2.4 percent price dip in the state capital, Sacramento. The posh Santa Barbara Coast suffered a 16.3 percent plummet in prices in July.
With flipping, some of the hardest hit areas were Marin County, just north of San Francisco, where 73.3 percent of flippers lost money and instead of a median profit, there was a median loss, a whopping $86,725 deficit. Likewise 68.4 percent of flippers in the Central Coast town of San Luis Obispo lost money, a median $15,900 loss. In El Dorado County, 70 percent of flippers lost a median $15,850. Also the larger Northern California region as a whole was in the negative flipping category with 52 percent of flippers losing money, a median $3,125.
By county, those with the smallest levels of flipping pain were San Francisco, where only 20 percent of flippers lost money; Stanislaus, 17.9; Tulare, 17.4 percent; Los Angeles, 16.1 percent; Fresno, 15.4 percent; and San Bernardino where only 12 percent of flippers lost money, according to HomeSmartReports.
