The prospect of home flipping is undoubtedly a risky one yet it can be quite the lucrative opportunity. Across the United States the frequency of home flips over the past couple of years has seriously been on the up while in Massachusetts they are not as popular or likely to succeed. The lower prices seen throughout the country, although certainly rising, have created an ideal moment for investors to take advantage of depressed homes to then resell them within six months on a profit.
This six month measurement is often used to define a house flip where a property was purchased and then resold all within that allotted time. Over the past year, home flips have increased by 19% nationwide and by an even larger 74% since the first half of 2011. These statistics, coming from the online marketplace for real estate data known as RealtyTrac, discovered that there were 136,184 total house flips already this year from January through June. Throughout these transactions, the investors profited an average of $18,391, or 9% more than their original purchase price. As a comparison, looking to the same corresponding first half of 2012, this years numbers far and away exceed 2012s average profit of $5,321; a 246% boost year-over-year.
What investors try to do and often succeed at is securing the margin where they are buying properties at 5% or more below the estimated market value of the home to then sell it at 1% or more over the same market value within six months. Daren Blomquist, the Vice President at RealtyTrac, mentions that, While flipping continues to be profitable in most markets, particularly those where the home price recovery is still nascent and a recent rebound in foreclosure activity allows investors to find distressed inventory at a discount, home flipping is tapering off in markets where fewer of those distressed bargains are available.
Looking to Massachusetts in particular, there were just 593 single-family homes flipped during the first half of this year with an average price of $289,029. This amount of sold properties, as it comes to be known, is down 36% from the first six months of 2012. Experts agree that the soaring real estate market in the Bay State is much to do with the disparity between our local figures and those that the greater nation is realizing. RealtyTrac analyzed 100 markets across the United States and determined that only 32 (including the Greater Boston Area) had declining rates of house flips. The other roughly two-thirds of the country, on the other hand, reflected the previously discussed growth in flips seen throughout much of the country. The rising prices in Massachusetts and overall stronger market has ultimately made it difficult for investors to locate properties here on the cheap to where it can be even considered worth the financial risk.
More Information: Boston Business Journal