Many people in California enjoy watching home flipping television shows, and the promise of a quick profit makes some people want to test the waters of home flipping themselves. One article reports however, that competition in the home flipping industry is increasing making it a less lucrative endeavor than it had been in the past.
What makes flipping popular?
Flipping is popular in today’s housing market. Housing prices are up, making it more enticing to buy a fixer-upper that you can hopefully sell for a good profit within a year. Nearly 95,000 homes were flipped in the third quarter of 2021, making up 5.7% of all homes sold.
Flipping is becoming less lucrative
Flipping is becoming less lucrative despite its popularity. The gross profit on flips during the third quarter of 2021 amounted to approximately $69,000. This is a 16% decrease from the third quarter in 2020.
Moreover, a flipper’s return on investment went down 32%, the lowest it has been since 2011. This is the greatest decrease since the 2009 housing crisis. Purchasing fixer-uppers has become more expensive, sometimes rising at a faster rate than resale prices. And it is anticipated that some flippers will simply be priced out of the market if interest rates go up.
Is flipping right for you?
You will want to make sure you research flipping opportunities carefully before jumping into the game. You may find it worth your time and money, or you may not. Either way, you can keep an eye on your local real estate market to track changes so you can make investments at opportune times.
