When you think about the California real estate market, “high home prices” might come to mind. In fact, according to the California Association of Realtors, the median home price in December was the second highest price of 2019 and its largest year-over-year increase since May 2014.
If you’re a real estate investor, you might be wary of the current real estate market conditions in the Golden State. However, a recent data analysis from Altisource, owner of the Hubzu real estate auction marketing platform, shows that for investors focusing on bank-owned or REO fix-and-flip properties, California offers a good opportunity to make a profit after the flip. In fact, according to data from markets where investors made the highest average profit after estimated repairs, 6 out of the top 10 markets were located in California – San Diego, Los Angeles, San Francisco, San Jose, Sacramento and Riverside. Seattle, Denver, Washington, DC and New York rounded out the top 10.
Affordability and supply continue to be an issue for home buyers in many areas of California. Based on the data, REO fix-and-flip homes are selling for less than the average sale price of homes in the market. As such, savvy investors may be able to sell their fixer upper quickly by pricing it competitively and reaching buyers who are looking for a deal.
It’s likely that California will continue to be a strong housing market in the coming years. If you’re thinking about investing in a bank-owned fix-and-flip property (or willing to take on some work yourself for a good ROI), why not take a look at these six California markets. The profit potential may surprise you!
When you’re ready to start your search, you can browse California properties marketed on Hubzu.
| Rank | MSA | Average Profit After Estimated Repairs | Average Purchase Price | Average Sold Price | Average Sale Price of Homes in the MSA |
| 1 | San Diego-Carlsbad, CA | $71,400 | $456,291 | $548,917 | $718,518 |
| 2 | Los Angeles- Long Beach-Anaheim, CA | $69,526 | $487,291 | $578,918 | $870,777 |
| 3 | San Francisco-Oakland-Hayword, CA | $65,585 | $647,597 | $734,878 | $1,093,913 |
| 4 | San Jose-Sunnyvale-Santa Clara, CA | $63,100 | $899,809 | $983,413 | $1,299,302 |
| 5 | Sacramento-Roseville-Arden-Arcade, CA | $52,599 | $288,655 | $365,973 | $460,733 |
| 6 | Riverside-San Bernadino-Ontario-CA | $51,423 | $267,090 | $342,191 | $396,462 |
Methodology:
Hubzu identified and analyzed metropolitan statistical areas with over one million people. Data was retrieved from October 1, 2018 to October 1, 2019. The average profit was calculated based on the difference between the sold price and purchase price, and assumes an average cost of repairs range between 25-35 percent of the sold price.
