Though 41% of the American population either somewhat or strongly prefers a newly-built home over an existing one, the percentage of flipped homes has been rapidly increasing.
Across the country, the home flipping market saw an 8% decrease from the previous quarter, and it was down 6% on the year. In Maryland and Washington, D.C., however, the house flipping rate increased a solid 10.7% quarterly and an incredible 32% year-over-year. The only state that saw a higher percentage of flipped homes was Hawaii, with 36%.
The hot housing market isn’t just good news for the real estate industry. New housing starts and renovations also drive growth in the U.S. construction industry, which generates $1.7 trillion a year in revenue. As a result, home flipping can help buoy local economies.
“Maryland is a little bit ahead of the game in clearing out their backlog compared to the District,” said Daren Blomquist, ATTOM Data Solutions senior vice president. “It’s in the lower-priced areas of Maryland that we’re seeing a lot of flipping.”
According to The Washington Post, within the Washington, D.C. area specifically, the up front discount for these flipped houses aren’t as good for buyers. The housing market is doing so well that buyers are forced to accept higher prices.
In Maryland, the average return on investment (ROI) for house flippers was 74.3%; the national average sits only at 47.4%.
Homebuyer surveys show that roughly 54% of future buyers are more willing to spend more money on a home, flipped or not, so long as it has hardwood floors. For home flippers, adding luxury fixtures and flourishes like hardwood floors can go a long way. With these additions and improvements to problem areas around the house, flippers are able to earn a significant amount more money than their initial investment.
Consumer Affairs reports that along with D.C. and Maryland, the other states across the country that are doing well in the house flipping market are Alabama, Tennessee, and Missouri.
“The business of financing for home flippers continued to grow in the first quarter of 2017 even as the home flipping rate plateaued compared to a year ago and average home flipping returns decreased for the second consecutive quarter,” added Blomquist. “Home flippers financed an estimated $3.5 billion in purchases for homes flipped during the quarter, up from $3.3 billion in the previous quarter and up from $2.4 billion a year ago to the highest level since the fourth quarter of 2007 — a more than nine-year high.”