NEW YORK ( TheStreet) -- The business of "flipping" homes is increasingly becoming a high stakes game.
According to the latest report from RealtyTrac, there were 32,993 single-family home flips -- where a home is purchased and subsequently sold within six months-- in the third quarter of 2013. That is down 35% from the second quarter of 2013 and down 13% from the third quarter of 2012.
But the number of flips of high-end homes, some with a multimillion dollar price-tag, are up sharply from the year earlier.
A total of 968 high-end homes nationwide were flipped in the third quarter, down 13% from the previous quarter but up 34% from a year ago.The majority of these flips took place in the New York Metro area and the four coastal California markets of Los Angeles, San Francisco, San Diego and San Jose. Flips on homes priced between $1 million and $2 million increased 42% year over year, while flips on homes priced between $2 million and $5 million increased 350% year over year. Due to the heightened activity in the upper-end of the market, the average gross profit made by real estate investors rose 12% year-over-year to $54,927. "Increasing home prices over the past 18 months combined with decreasing foreclosures have created a market less favorable to the high quantity of middle- to low-end bread-and-butter flips that we saw late last year and early this year," said Daren Blomquist, vice president at RealtyTrac in a statement. Home flipping decreased substantially from a year ago in several former hot spots such as Phoenix (37% decrease), Tampa (47% decrease), Orlando (28% decrease), and Stockton, Calif. (down37 %). But "the sharp rise in high-end flipping indicates there is still good money to be made for flippers willing and able to take on the additional risk of buying and rehabbing more expensive homes," Blomquist pointed out, adding that the average gross profit on each high-end flip is more than four times that of flips in the lower end of the market.