Recent data released by RealtyTrac for the second quarter of 2014 indicated that Pittsburgh is the best market in the nation for home flipping, while the San Francisco-Oakland-Fremont market was the worst.
Flipped homes accounted for 3.6 percent of total home sales in Pittsburgh, a increase of 3 percent over the second quarter last year. But while the average gross return on investment for flipped homes in Pittsburgh was 63 percent for Q2 2013, that percentage shot up to 106 percent for Q2 2014, the highest percentage by far for any market in the nation.
Rounding out the top five best markets for flipping homes in Q2 2014, according to average gross ROI, were New Orleans-Metairie-Kenner, Louisiana (76 percent); Baltimore-Towson, Maryland (73 percent); Virginia Beach-Norfolk-Newport News, Virginia (66 percent); and Deltona-Daytona Beach-Ormond Beach, Florida (63 percent). The national average gross ROI for flipped homes was 21 percent, according to RealtyTrac.
San Francisco-Oakland-Fremont turned in an average gross ROI of –9 percent, the lowest in the nation, RealtyTrac reported. Flipped homes made up 5.6 of all home purchases in the Bay Area for Q2 2014, a decrease of 33 percent from the same period last year. The only other market with a negative average gross ROI in Q2 2014 was Las Vegas-Paradise, Nevada (–4 percent). Third worst was Mobile, Alabama (9 percent), while Charlotte-Gastonia-Concord, North Carolina-South Carolina, and Madison, Wisconsin tied for fourth worst with 13 percent each.
According to RealtyTrac in Q2 2014, flippers bought homes at an average of 8 percent discount from their estimated market value (AVM), then re-sold the homes at an average of 6 percent higher than their AVM. All of the 10 best markets for flipping homes except one (Chattanooga), flippers purchased properties at a discount of 24 percent or more from their AVMs, then sold the properties at a premium rate above their AVMs.