What is home flipping and how has it had an effect on our market? Here’s what you should know.
Selling a home? Get a free home value report
Have you heard about the home-flipping craze? Home-flipping is the process of buying a home, making improvements to it, and then turning it around to sell for a profit.
A decade ago, home-flipping was a huge trend. The real estate market was on fire at the time. Unfortunately, though, it was the extreme lengths to which the home-flipping craze was taken that caused the real estate crash we saw between 2008 and 2009.
However, with the recent popularity of television shows like “Flip or Flop” and “Flipping the Block,” the home-flipping craze has come back in full swing.
If you’re considering going into home flipping, there are a few things to consider before doing so. First of all, know that home flipping is now more profitable than ever before.
A Waco, Texas home that was recently featured on HGTV’s “Fixer Upper,” for instance, was originally bought for $28,000. After several renovations, however, that same home is being listed at over $950,000—that’s over 30 times its original purchase price.
While this big of a profit isn’t the norm, the flipping game is becoming more and more profitable all the time.
The home flipping-craze has come back in full swing.
The median household in 2016 sold for $189,000—over $62,000 above the average sales price. At a 49.2% return, this is the most profitable return we’ve seen since 2000.
But these high returns aren’t the only thing driving the current home-flipping craze. Years ago, most home-flipping was a result of speculation. Investors would buy and fix homes, then wait for the market to go up.
Due to the strength of our market combined with a lack of inventory, this is no longer the case. Today, flippers need to bring added value to their flips. Home-flipping today is much more profitable than it was in past years. This is largely thanks to low inventory.
Though it isn’t just sellers who benefit from this flipping craze. Because flipped homes are done well and are available in all price points, home-flipping has brought a lot of opportunity into the market for buyers, as well.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.
