Home-flipping has become a much-tougher way to make a living – and a profit.
Nationwide, the average home-flipper had a 25% profit-margin during the second quarter, the lowest for the three-month period since 2008 – and far from the record 63% in fall 2012, according to ATTOM Data. Yep, the figures from when the housing market collapsed and prompted the Great Recession.
In California, the profit-margin was worse.
Buying, fixing and flipping homes in the Golden State has evolved into one of the worst ways to make money in real estate. California’s average home-flipper earned a dismal 17.7% profit – with a $112,000 payday.
Now, remember the profit margin and the dollars in the pocket are based only on the purchase price compared to the sale price and does not include the often-extraordinary costs of flipping a home. Labor, repairs, property insurance, property taxes and sales commissions can turn the dream of a nice payday into a money pit nightmare. (Fixer-uppers bought with a mortgage further cut into profits.)
A COMPLEX BLAME GAME
Blame high prices coupled with more competition for moderately priced properties. And even with curb appeal from an extensive makeover, home prices are stuck in a rut.
“We’re seeing very low profit margins from home flipping because of the historically high cost of homes,” said Rob Barber, CEO at ATTOM. “The initial buy-in for properties that are ideal for flipping, often lower-priced homes that may need some work, keeps going up. As prospective homeowners get priced out of the middle and high end of the market, they’re more likely to be competing with flippers over the same homes.”
And that affects the bottom line. A lot.
Only three cities – Fresno, Bakersfield and San Francisco – had profit-margins better than the national average of 25%. The Central Valley cities of Fresno and Bakersfield had healthy returns of 40% and 36%, respectively. But the paydays, which does not include the previously mentioned expenses, were among the lowest in the state at $105,000 and $79,250 (see table, below).
Los Angeles had the lowest profit-margin at 15% in the state.
BIG DOLLARS IN THE BAY AREA, BUT SO-SO PROFIT MARGINS
The best paydays were in the Bay Area, at $263,750 in San Francisco and $251,500 in San Jose.
If you’re looking for a bright spot, all nine cities in California exceeded the average payday of $63,500.
But for most home-flippers in California, buying, fixing and selling a home within a year is more like flipping dollars over.
Flipped home sales and profit margins in Q2 2025
| Metro | Flipped home sales | Compared to a year ago | Profit | Profit margin |
|---|---|---|---|---|
| California | 6,455 | +7.0% | $112,000 | 17.7% |
| Bakersfield | 214 | +11.7% | $79,250 | 35.6% |
| Fresno | 181 | +3.8% | $105,000 | 40.4% |
| Los Angeles | 2,186 | -18.3% | $130,500 | 15.0% |
| Riverside | 987 | -1.1% | $90,000 | 18.8% |
| Sacramento | 456 | -3.5% | $80,250 | 19.6% |
| San Diego | 585 | +5.9% | $135,666 | 16.7% |
| San Francisco | 536 | +16.8% | $263,750 | 28.2% |
| San Jose | 245 | +41.5% | $251,500 | 17.5% |
Source: ATTOM Data
San Jose is the only major city in California with a so-called balance market, where buyers equal the number of sellers. ADOBE STOCK
Buyers cheer, sellers jeer the glut of listings
California has largely become a buyers’ market in recent months, with homeowners listing their properties easily outpacing shoppers looking to purchase.
Seven of eight cities are considered a buyers’ market in the state, including 58% more sellers in Riverside in September, according to a Redfin report.
It’s an about-face from a year ago, when buyers were competing for far too-few homes on the market. In September, active listings increased for 20 straight months, according to the California Association of Realtors.
SAN JOSE IS THE LONE BALANCED MARKET IN CALIFORNIA
While lower mortgage rates have lured more would-be buyers in recent months, more homes are landing on the market. Almost 40% more sellers in Los Angeles, and 34% more in the Sacramento region (see table, below).
San Jose, flush with AI investment, is the only so-called balanced market in the state, with 2.8% more sellers than buyers.
California cities are faring better than many others nationwide, where there are 37% more sellers compared to buyers. Seven cities, led by Austin, have twice as many sellers than shoppers.
| City | % more sellers vs. buyers in Sept. ’25 from a year ago |
|---|---|
| Anaheim | 20.6% |
| Los Angeles | 39.6% |
| Oakland | 14.6% |
| Riverside | 57.9% |
| Sacramento | 33.9% |
| San Diego | 18.9% |
| San Francisco | 10.2% |
| San Jose | 2.8% |
Source: Redfin
Los Angeles has the second-largest rent increase for single-family homes in the U.S. SHUTTERSTOCK
California bucks national trend, as rents increase for apartments, homes
Need more evidence that real estate is all about location?
Rental rates for apartments and single-family rentals declined in the past several weeks, causing some concern for landlords and property owners.
Nationwide, apartments rents dropped for the second straight month to $1,394, off 0.8% from a year ago, according to Apartments List. The vacancy rate increased to a modern-day record of 7.1%.
Single-family home rentals inched up 1.4% in August, less than half the 3% increase from a year ago, according to Cotality (formerly known as CoreLogic).
DEMAND AND LACK OF HOUSING BOOST RENTS IN CALIFORNIA
Bad signs for a struggling rental market, as an abundance of new apartments hit the market and more homeowners unable to sell their home — at least for the price they wanted — are resorting to rentals.
Well, except in California.
The state boasts three of the four cities with the largest annual rent increases, including a nation-leading 4.9% in San Francisco, followed by Fresno at 4.1%. San Jose had the fourth-highest year-over-year rent increase at 3.8% in the U.S. Those rent gains are four times the national average.
Los Angeles’ single-family home rents gained 2.8% from a year ago, the second-highest increase in the nation behind Chicago at an impressive 4.7%.
The devastating wildfires of last January that destroyed about 16,000 buildings, many of them homes and apartments, are affecting rental rates in the Los Angeles region, said Molly Boesel, senior principal economist at Cotality.
The far-reaching economic effect of the Altadena and Palisades fires show that “local conditions such as recovery efforts, limited housing supply and regional economic factors can still influence rental trends even as national price growth moderates,” Boesel said.
About one of every four homeowners in California lives in a community with HOA fees. PEXELS
HOA fees could be a lot worse, really
Nobody likes homeowners’ association fees (HOAs).
Check out home listings on Redfin and Zillow, and agents promote HOA-free properties like BOGO sales online.
But guess what?
California’s average HOA of $278 per month is cheap compared to other places, like New York, the District of Columbia and Hawaii. New York’s average HOA fee of $739 s almost 50% more than second-place DC at $505. Hawaii landed at $470, according to the U.S. Census Bureau.
California has the ninth-highest HOA fees in the nation. Not bad considering home prices and property values in the state are among the highest in the U.S.
ONE OF FOUR HOMEOWNERS LIVE IN AN HOA HOOD
But HOA fees will likely continue to increase, especially with the cost of property insurance and maintenance and repair projects rising.
Almost one of every four (24%) homeowners in California live in an HOA, the 17th-largest percentage in the U.S. Next-door neighbor Nevada has the largest percentage of homeowners in an HOA community at 51% in the nation (thanks Las Vegas and Reno).
Nationwide, one of every four homeowners belong to an HOA. Fewer than 10% of North Dakota and Maine homeowners live in an HOA neighborhood.
California’s HOA fees may be in the top 10, but penalties will likely be among the lowest, at least once a new law goes into effect in January. Under the new law, first-time penalties are capped at $100.
So, go ahead and park overnight on the street, leave the garage door open or forget the waste bins at the curb. Break the rules, at least once.
Suisun City could annex large swath of California Forever development
California Forever’s ambitious plan to develop a city with 400,000 residents took a twist this month.
Under a new plan, almost 22,900 acres of the California Forever development – often referred to as a walkable community – would become part of Suisun City.
The city, which currently has about 30,000 residents, is considering the proposal that could make it the largest in Solano County. City officials will conduct an environmental review process over the next several weeks.
California Forever has garnered much attention, as the group has been buying thousands of acres in recent years, eventually amassing about 65,000 acres and becoming the largest landowner in the county. The former behind-closed-doors group has detailed more information during the past year, including the long-term plans for the project.
DECADES FOR DEVELOPMENT
If approved and established, California Forever would be developed over two 20-year periods, with the final construction after 2070.
The walkable community would include single-family homes, apartments, plenty of retail and workplaces. California Forever officials compare the development to “much-beloved” neighborhoods in nearby Davis and Noe Valley in San Francisco.
The application by California Forever for Suisun City to annex the acreage comes after an effort to place a measure on the ballot to bypass certain zoning restrictions in November 2024. Poll numbers showed the effort would have gone down in defeat, leading California Forever officials to pull the measure from the ballot.
Asking the city to annex at least some of the acreage could help pave the way for the development, ensure residents a voice and more oversight. But it would greatly transform Suisun City into one of the larger cities in the Bay Area.
