Another Top-10 List — Best and Worst Markets to Flip Houses

RealtyTrac, a subsidiary of ATTOM Data Solutions, reports that home flipping is now at the greatest rate seen since 2007.  In 2016, the median acquisition cost of a flip was $127,276 and the resale price $189,900 resulting in a gross flipping profit of $62,624 or 49.2 percent.  From that gross amount any and all renovation expenses, carrying costs and resale fees need to be deducted with the remaining amount counted as profit.

Where are the best markets (and worst) for flipping houses?   To answer this, WalletHub once again analyzed the 150 largest cities across the country focusing on three primary categories:  Market Potential, Renovation and Remodeling Costs, and Quality of Life.  Individual metrics within each category along with respective points are detailed.

Market Potential – 35 Total Points, 2.92 points per metric unless otherwise noted

  • Average Gross Return on Investment – 8.75 points, triple-weight
  • Median Purchase Price
  • Percentage of Home Flips
  • Average Days to Flip
  • Home Turnover Rate – Percentage of all homes sold in 2015 vs 2014
  • Housing-Market Health Index
  • Average Ration of Sale Price to List Price
  • Real Estate Agents per Capita
  • Foreclosed Homes per 10,000 Homes
  • Real Estate Tax Rate – Median Real Estate Tax Divided by the Median Home Price

 Renovation & Remodeling Costs – 35 Total Points, 8.75 points per metric

  • Average Kitchen Remodeling Costs
  • Average Bathroom Remodeling Costs
  • Average Full-Home Remodeling Costs
  • Average Construction Worker Salary – includes plumbers, electricians, plumbers and so forth

Quality of Life – 30 Total Points, 3.75 points per metric

  • Crime Rate
  • GreatSchools City Score
  • Percent of Population with Walkable Park Access
  • Family Friendliness  — WalletHub’s Best & Worst Cities for Families ranks
  • Annual Job Growth Rate
  • Unemployment Rate
  • Median Salary – cost of living adjusted
  • Pace of Economic Growth – WalletHub’s Fastest Growing Cities ranks

The top-10 housing markets for flips are listed in the first table, and the bottom-10 are in the second.  Note that the top and bottom tables are each populated by cities having somewhat similar home values.  The most favorable markets are generally more affordable while the most-challenging markets are among the most expensive in the country.  Six of the ten most challenging markets to flip homes in are in California.

8-9-17 table1

8-9-17 table2

The next table details the least and most expensive home prices.

8-9-17 table3

The greatest and least gross returns are ranked below.  Not the obvious negative correlation between median prices and gross returns.  It may well be that in the higher-priced markets, there is such a shortage of supply that even homes needing renovation and repair get bid-up to lofty prices.

8-9-17 table4

To read the entire WalletHub Flipping study and review all 150 market’s scores click https://wallethub.com/edu/best-cities-to-flip-houses/23158/

To view RealtyTrac greatest percentage flip markets by ZIP Code in 2016 click http://www.realtytrac.com/news/real-estate-investing/2016-year-end-u-s-home-flipping-report/

Flipping is big business, and given the tight levels of inventory in many markets across the country, truly a value-added enterprise.

Ted

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