House flippers are in a race to take advantage of the recovering housing market, but they are carefully choosing markets that haven’t posted as large of run-up in home prices.
During the first half of this year, 9 percent of single-family homes purchased were resold again within six months, according to RealtyTrac data.
House flipping is increasing in areas such as New York, Washington, D.C., Chicago, and several Florida cities—areas that haven’t seen the largest home price gains recently. Meanwhile, investors are cooling to the markets in Phoenix, Atlanta, San Jose, and Las Vegas—areas that have seen some of the largest price increases.
“The flippers try to catch the wave at the bottom,” explains Daren Blomquist, RealtyTrac vice president.
Individuals who are interested in flipping houses should also examine the time and financial resources it would take to gain profit. Home repairs and renovations take time and a significant portion of your budget. These properties usually require extensive repairs and upgrades. For instance, foundation repair services will be needed if the house has been neglected and cracks have formed in its foundation walls. It may also be necessary to hire a residential electrician to inspect and repair the home’s wiring and electrical system. Outside, the lawn might need to be revitalized and the walls could use a new coat of paint. The driveway could also have holes or cracks so an asphalt repair or replacement should be scheduled. In addition, you may seek asphalt sealing services to protect the new driveway.
According to RealtyTrac, flippers are also showing increased interest in cities that still have a great deal of distressed inventory, such as New York. There, 5,000 single-family homes were flipped during the first half of the year—a 437 percent increase from last year, according to RealtyTrac. Likewise, in Jacksonville, Fla., flipping has increased 260 percent.
On the other hand, in markets such as Las Vegas—where home prices have posted strong gains in the past year—flippers did 41 percent fewer deals in the past year, as well as 35 percent fewer in Phoenix.
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