Report: Dip in house flipping indicates cooling in SF real estate market

San Francisco saw a drop in the number of homes that were flipped last year, indicating there may be a decrease in competition among The City’s real estate market, according to a report released Thursday by Trulia, a national online real estate tool.

The rate of house flipping — in which a buyer sells a home within a year of purchasing the property — fell in San Francisco to 3.3 percent in 2015, compared to 3.6 percent in 2014, the report shows.

Though the change might seem small, the downturn aligns with a larger cooling trend in the market, said Trulia’s chief economist and author of the report Ralph McLaughlin.

“That’s good news,” McLaughlin said. “It might mean that in the future, there’s less speculation in the Bay Area.”

The figure stands in sharp contrast to The City’s peak home flip rate of 7.7 percent back in 2001 and throughout the mid-2000s, when San Francisco’s flip rate ranged from 6.2 to 7.2 percent, McLaughlin said.

San Francisco also saw the lowest home flipping rate compared to other major cities in the Bay Area. Home flip rates for San Jose and Oakland were 4.3 percent and 4.6 percent, respectively, according to the report.

McLaughlin attributed two major factors to San Francisco’s “cooling down” of home speculation. First, there are much more people looking to purchase homes than there are homes for sale in The City. Second, the homes that are for sale are significantly more expensive compared to homes in other major cities, making it harder to fix and sell for an even higher price to turn a profit, McLaughlin said.

“The combination of short supply and high price makes it difficult for ‘flippers’ to find houses in the Bay Area,” McLaughlin said.

The data for the report was compiled by looking at the nation’s largest 100 cities and finding the percentage of houses bought and later sold within one year of purchase compared to the overall home sales for each city. Homes that were sold as part of a foreclosure process were not included in the findings, McLaughlin said.

Las Vegas had the highest rate of home flips, with 10.4 percent, a 9 percent surge from the year prior, according to the report. Other cities also saw dramatic increases in home flips across the U.S., though the national level at 5 percent, McLaughlin said.

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