What Does the House Flipping Trend Mean for Home Buyers?
Multiple flips in San Diego County neighborhoods highlight trending areas
“Flipping is a great barometer of whether a zip code is hot,” says Daren Blomquist, senior vice president of ATTOM Data Solutions. He defines a flipped house as one that’s been sold twice within a 12-month period. Multiple flips in a specific area means there’s a lot of interest there—either investors are renting it out or first-time home buyers are moving in.
San Diego County, which is home to 1,174,901 single-family houses and condos, had 530 flips in the third quarter of 2016, or 5.1 percent of all sales. That number is actually down from last year—we are flipping less, no matter what all the HGTV makeover shows have you thinking.
And yet, San Diego’s flipping numbers still reveal some trending areas. Of the 98 zip codes in the county, 17 had no flips in the third quarter. The top three, with 21 flips each, were in Oak Park (highlighted in last year’s feature), Rolando/El Cerrito (see page 80), and inland Oceanside.
More expensive areas, like Rancho Santa Fe’s 92067, saw just two flips, because it takes more time and capital to flip an 8,000-square-foot home. Clairemont and Kearny Mesa (92111, page 79), had nine flips, which is up 51 percent from the same quarter in 2015.
For the buyer, does this mean higher home prices overall and more competition? “Flippers don’t artificially drive up prices the way subprime mortgage lenders did by providing access to high loan-to-value mortgages and encouraging people to buy units they could not afford,” says professor Norm Miller, Hahn Chair of Real Estate Finance at USD’s business school.
“The housing market prices are driven by changes in demand—think demographics or income—or supply or a lack of supply—think about all the neighborhoods that won’t support new housing development or more density. Flippers are not the cause of price increases, but our local officials and our NIMBYs are. We desperately need more housing with density and smaller units if we want to provide more affordable housing, but it has become harder to get approvals in urban areas or rural markets.”