Home flipping in New York City – which bucked a nationwide decline in 2013 – has dropped sharply this year, according to data from RealtyTrac.
Just 3.66 percent of home sales in the five boroughs were flips during the first quarter, from 12.39 percent in the first quarter of 2013.
“Even though there are a lot of distressed properties [on the market], there’s not as much margin for them to work with, in terms of home prices rising quickly,” said Daren Blomquist, a vice president at RealtyTrac, which defines flips as homes that are purchased and then sold again within six months. “That’s the element that is starting to fade in New York.”
Broken down by borough, RealtyTrac data shows that 2.31 percent of Bronx sales were flips; 1.3 percent of sales were flips in Brooklyn; 7.69 percent of sales were flips in Manhattan; 2.75 percent of sales were flips in Queens and 8.39 percent of sales were flips in Staten Island.
Nationwide, the percentage of single-family home sales that were flips dropped to 3.7 percent in the first quarter, compared with 6.5 percent a year earlier, according to RealtyTrac.
In general, flipping is down nationwide because there are fewer distressed properties on the market as home prices have increased, after bottoming out in March 2012, Blomquist said. In New York City, flipping reached a low point in the first quarter of 2012, when 1.27 percent of sales were flips – a reflection of investors’ lack of confidence, he said.
In contrast, 16.49 percent of home sales in the city in the fourth quarter of 2012 were flips, according to RealtyTrac’s data. Nationwide, 7.1 percent were flips during the same time period.
Sandra Smith, a broker at Urban Compass, said she’s currently working with fewer flippers because prices have increased. “The entry level is so high,” said Smith, who previously spent seven years at Brown Harris Stevens.
Townhouses on the Upper West Side, which started in the $3.5 million to $4 million range five years ago, now have an entry point of between $6 million and $8 million, Smith said.
But there are still deals to be found in neighborhoods like Harlem or parts of Brooklyn, she said.
For example, the owner of a brownstone at 196 Hancock Street in Bedford-Stuyvesant flipped the multi-family home, selling for $2.1 million just four months after paying $1.2 million for the property.
And, she noted, there’s ample flipping at trophy apartments, particularly in new development buildings, where the mentality of “the more you spend, the more you make” exists.