The Ups and Downs Of Flipping Houses
For many years flipping homes has been not only a great way for investors to revitalize areas but make money at the same time. Within the past few years, there has been fewer who were actually flipping homes since they didn’t want to take a risk with the chance of the housing market crashing again. But now as confidence in the housing market increases, investors are using this opportunity to make a profit from buying and fixing homes, placing home flipping at a 10 year high.
Flipping is a common term used to describe the act of buying and selling a home within a year. The recent trend in flipping is also different than a decade ago, that investors now would rather flip homes, instead of renting them out to develop a passive stream of income. While flipping today is not quite like what it was before 2006, when investors used risky mortgages, it is reaching new highs in 7 percent of the nation’s metro markets, including Baltimore, Buffalo, New Orleans, and Seattle.
House flipping is a great concept when done responsibly and most areas welcome flippers for their help with revitalization of cities. Flippers take an eye sore or a vacant property and make it look nice. And are able to turn a house around in a few months or less, because that is what they do. They then usually sell the house to a buyer who will take care of the home for years. If that same distressed house was sold to a buyer who is not a flipper, they may not have the money, time, or resources to repair the home in a timely manner or ever.
However, flipping activity can contribute to a home price pressure cooker that overheats a housing market, and several experts are starting to see evidence of that pressure cooker environment in a handful of markets. Usually flippers look for distressed properties either in the foreclosure process or already bank-owned. Most of these properties are not always listed on public sale sites.
Today there are fewer of these type of homes available, so flippers are moving to the mainstream market, creating that new pressure. This pressure makes it harder for first time buyers or people with lower income to find affordable homes, since they cannot compete with the cash offers investors generally offer. In other words, home flipping can artificially inflate the housing market and create higher prices and fewer options for affordable housing. The next few years will really show us if this type and quantity of home flipping is a good or a bad thing.
For many years flipping homes has been not only a great way for investors to revitalize areas but make money at the same time. Within the past few years, there has been fewer who were actually flipping homes since they didn’t want to take a risk with the chance of the housing market crashing again. But now as confidence in the housing market increases, investors are using this opportunity to make a profit from buying and fixing homes, placing home flipping at a 10 year high.
Flipping is a common term used to describe the act of buying and selling a home within a year. The recent trend in flipping is also different than a decade ago, that investors now would rather flip homes, instead of renting them out to develop a passive stream of income. While flipping today is not quite like what it was before 2006, when investors used risky mortgages, it is reaching new highs in 7 percent of the nation’s metro markets, including Baltimore, Buffalo, New Orleans, and Seattle.
House flipping is a great concept when done responsibly and most areas welcome flippers for their help with revitalization of cities. Flippers take an eye sore or a vacant property and make it look nice. And are able to turn a house around in a few months or less, because that is what they do. They then usually sell the house to a buyer who will take care of the home for years. If that same distressed house was sold to a buyer who is not a flipper, they may not have the money, time, or resources to repair the home in a timely manner or ever.
However, flipping activity can contribute to a home price pressure cooker that overheats a housing market, and several experts are starting to see evidence of that pressure cooker environment in a handful of markets. Usually flippers look for distressed properties either in the foreclosure process or already bank-owned. Most of these properties are not always listed on public sale sites.
Today there are fewer of these type of homes available, so flippers are moving to the mainstream market, creating that new pressure. This pressure makes it harder for first time buyers or people with lower income to find affordable homes, since they cannot compete with the cash offers investors generally offer. In other words, home flipping can artificially inflate the housing market and create higher prices and fewer options for affordable housing. The next few years will really show us if this type and quantity of home flipping is a good or a bad thing.