Home Flipping Trends 2017
The Fix and Flip market is on the rise with zero expectation of slowing down! According to a new report from Trulia, more than 6% of home sales last year were flips. That’s a steady increase from previous years. Some fear that this ten-year high is an indication that things may start slowing down. However, with the added value improvements home flippers make and the current increase in demand for housing, the favor is still very much in the hands of the flippers!
Who are the homebuyers?
Millennials, numbered at 83.1 million, represented more than one quarter of the nation’s population in 2015 according to the US Census Bureau. They were the largest group of homebuyers (34 percent) for the second consecutive year states NAR’s 2017 Home Buyer and Seller Generation Trends study. Those born on or after 1982 are growing up, settling down and looking to buy their first home.
This is great news for flippers! Considering the low supply of housing, millennials will be driven towards older properties that can be fixed up like new with some improvements.
Small Supply = Fix and Flip Opportunity
A decrease in inventory signifies a golden period for flippers. Due to the wide price gap between mid-level starter homes and next level up homes, those that invested in a mid-level starter property several years ago are not looking to move up and take a loss but staying put. Therefore, the vast majority of housing availability is coming from baby boomers that are selling. And these homes need updates and renovations- creating vast opportunity for fix and flip investors.
The Rise of Luxury Flips
According to RealtyTrac, the housing data company, there has been a surge in high-end and luxury flipping nationwide. Flips of homes valued at $1 million or more have risen close to 40 percent between 2011 and today! That figure is astronomical. There are a few reasons for the trend.
Wall street investors moved into the mid-market with money to spend, buying up foreclosures and using them mostly to rent. Therefore, the low to mid-market dried up. Daren Blomquist, RealtyTrac’s vice president, stated: “Flippers are getting more confident with that the market is really recovering, and therefore are more willing to go high-end, even thought it’s more risky.”
Due to the stock market doing so well there is a lot of investor cash out there and a huge amount of wealth and pent-up demand at the high-end of the market. Blomquist states that when a beautifully refurbished mansion hits the market, it’s snapped up, often with an all-cash offer. And let’s not forget about foreign investors. Last year alone, Chinese investors spent $12 billion on U.S. real estate! Behind Canada, they are the second biggest foreign investor. High-end flipping is certainly risky. But like anything else with big risks, the achievement is that much sweeter.
These current trends indicate that home flipping isn’t going anywhere and will continue to play a big role in the home buying market. It takes a lot of skill, experience, will and guts to successfully fix and flip homes. Those with the patience to get good at it will reap the rewards.