Home flipping has always been riskier, pertaining the risk of sudden fall of the rates, and never good for light hearted people.
Sound familiar? Real estate Denver co (companies) have long had a love affair with the seductive gamble of snagging cheap fixer-uppers, rehabbing 'em, then reselling fast, hopefully for a sweet, sweet profit. But this national obsession became a national nightmare during the housing crash, when swollen real estate portfolios of everyday folks—pumped up by low- or no-credit mortgages—became financial anvils, dragging many under water. As the market bounced back, so, finally, did flipping.
Now there's a new factor raising stress levels and blood pressures anew: the current slowdown in the estate sales Denver housing market, with prices actually starting to fall in some cities. If those prices drop too far, too fast, then flippers can lose value on homes even as they work to improve them. So the realtor.com® data team figured it was time to find out where home U.S. home flipping is up—and down—the most. This isn't just important for would-be flippers; it's also a critical factor in predicting where those key markets are heading.
So what did we find? The markets with the biggest drop in flips are those where prices are slowing down, such as larger coastal cities where costs got ahead of what buyers could afford. The places where flips are up tend to be smaller, more affordable cities getting influxes of new residents. And perhaps most surprisingly, some of the areas where this sort of speculative real estate investment contributed most to the last bubble, like Las Vegas and Phoenix, are where flipping is booming yet again.
Here's what's not surprising: Over the past four years Denver homes-flipping profits have gradually shrunk, from returns of 42% over purchase prices down to 38%. And that drop is much bigger than it sounds, because it doesn’t factor in renovation and remodeling costs—which can surpass 20% of the purchase price, and are rising in many places. But even as returns shrink, the overall number of flips grew 3.5% in September compared with a year earlier, according to a realtor.com analysis of home sales.
Reality check: A slowing housing market alone won’t be enough to fully derail home flips. As it turns out, these rehabbed abodes can be catnip to price-sensitive millennials. Read more