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Home flipping is up; here’s where returns are highest

Aly J. Yale
The Mortgage Reports contributor

Flipping out

Home flipping is once again a major force in the housing market. According to new data, it accounted for more than 10 percent of all home sales last quarter — nearing all-time high levels.

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Flipping gets a boost

According to data from CoreLogic, home flipping activity accounted for 10.6 percent of all home sales in the fourth quarter of 2018. That’s the highest fourth-quarter flipping share since 2002 and just a clip under the all-time high of 11.1 percent.

Home flipping as a whole has been on the rise over the last decade after bottoming out in 2008 and 2009.

It’s highest in Birmingham, Alabama, where flipping accounts for 16.5 percent of all home sales, Other cities with high rates of flipping include Memphis, Tennessee; Tampa, Florida; Las Vegas; and Camden, New Jersey.

Flipping is lowest in Austin and Houston, Texas; Bridgeport, Hartford and New Haven, Connecticut; Springfield, Massachusetts; and Pittsburgh.

How to get the best deal on a flip

Making more with less

Home flippers are also seeing more returns from their efforts, too. Data shows that flippers made returns of 40 percent in the last quarter of 2018 — up from just 20 percent at the start of the year.

The reason for the increase in revenues? According to Ralph McLaughlin, deputy chief economist at CoreLogic, it’s due to a change in strategy.

“Back in the early 2000s the average flipper didn’t make much from either buying at a discount or selling at a premium, suggesting that flippers were relying more on speculation and rising prices than anything else to make a return,” McLaughlin said. “However, since the Great Recession, flippers have been increasingly good at acquiring properties at a discount, either because the properties were legally, financially or physically distressed. This suggests that flippers have shifted from speculating in the housing market to adding value, making flipping investments more sustainable in the long run.”

Home flipping for cash? These cities hold the most potential

Flipping returns are highest in areas where housing is older. Detroit flippers see returns of almost 96 percent, while those in Philadelphia see an average 92.8 percent returns. Other cities with high flipping returns include Pittsburgh; Cleveland, Akron and Toledo, Ohio; Baltimore; Buffalo, New York; and Wilmington, Delaware.

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Interested in flipping a house? Then shop around and see what mortgage rates you qualify for today.

Verify your new rate (Aug 20th, 2019)