House Flipping at a 10 Year High
There’s no secret house flipping is an extremely hot trade right now. The economy is in solid shape and the real estate market is booming across the country. It’s become a common trade to give new life to lower end properties. It helps revitalize the neighborhood, provides a quality product for the new homeowner, and allows the flippers to make money.
What is a “home flip”. A home flip is classified as a second sale within a 12-month period based on public records.
In 2016, 193,009 homes were flipped, just behind the previous high of 276,067 in 2007. So, it’s safe to say home flipping is at its highest rate since 2007. A flood of capitol and a low inventory of sellable homes has led to this flipping boom. Investors will travel to areas fall and between to find discounted properties ripe for flipping. So, why is it this popular? $62,624 – the average gross flipping profit in 2016. The ROI is quite good when properly done. Wage growth is supporting rising home prices, and as long as that continues, you’ll see more and more flipping. Now, not all flipping is good. A valid argument is that it gentrifies a neighborhood and moves low-income folks out. If values around go up and you can no longer afford the area, you’re likely forced into a situation to sell. Housing affordability is key for all of us, but as long as there is demand, we’ll likely see flipping continue.
So, where are the best returns happening? The top three cities were East Stroudsburg, Pennsylvania, Pittsburgh, Pennsylvania and Cleveland, Ohio. Other big name notable mentions are New Orleans, Chicago and Jacksonville. Where are the most flips occuring? Memphis leads the way on this one with 11.7% of home sales in 2016 being flips. Other notable mentions are Tampa Bay, St. Petersberg, Las Vegas and Miami.
For more information, please view the report from Attom Data here.