A new study by RealtyTrac found the overall rate of homes being “flipped” slowed during the third quarter, but at the high-end of the market the practice continued to accelerate.
For houses worth $750,000 and more, flipping increased by 34% during the third quarter of the year. For homes worth between $1 million and $2 million, flipping was up 34%; and for homes between $2 million and $5 million, flipping increased by 350%.
Overall, house flipping—which refers to buying a home and quickly re-selling it at a profit—fell by 13% in the third quarter. While the numbers were down, investors were still able to earn a tidy $55,000 gross profit per property. It is generally considered that the rapid increase in home prices that defined the housing market during the early part of the year has plateaued, and now there are fewer deals to be had. That apparently is not the case at the top-end of the market.
According to Marketwatch, more than 75% of house flipping occurred in just five cities, all of which have in common a large supply of high-end homes. They were the New York metro area, Los Angeles, San Francisco, San Jose and San Diego.
It’s more than just flipping, however. The high-end of the housing market as a whole continues to be strong. Sales of million-dollar-homes are up 33% on the year and they account for 2.4% of all sales, according to a study by the National Association of Realtors.
With that said, so-called “bread-and-butter” flips of middle- and low-end homes will likely continue to slow in coming months, according to Marketwatch. Increasing home prices and fewer distressed properties have chipped away at house flipping at that level.