The median age of a home in the U.S. that has been flipped — meaning it was renovated substantially to raise its resale value — is on the rise, hitting 37 years old in 2016, according to a new report from Attom Data Solutions. The figure is double the pre-recession median.
Meanwhile, flipped homes have shrunk in size from their peak at a median 1,482 square feet in 2012 to 1,422 square feet in 2016. The figure has fallen slightly below its pre-recession level, indicating that many homes flipped in the intervening years were a part of the market overreach that contributed to the crash, according to MarketWatch.
- Seven in 10 homes flipped in 2010 were owned by the bank or in foreclosure compared to four in 10 in 2016. Those homes sold for a median $189,900 with a median gross profit margin of 49.2% in 2016.
Flipping homes can be good business for remodelers, many of whom relied on the practice during the downturn to bolster their income streams.
A report last month from real-estate website Trulia found that the practice of home flipping reached its highest level since 2007 in 2016, accounting for 6.1% of sales that year compared to 5.3% in 2015. Popular markets for home flipping include Las Vegas, where those homes took a 10.5% share of sales last year, followed by Daytona Beach, FL (9%), Tampa, FL (8.4%), and Memphis (8.2%).
There is some concern, however, that an environment of elevated home prices is encouraging flippers to upgrade the homes considerably and resell them at a much higher value, reducing the volume of entry-level inventory currently on the market.
The supply of for-sale housing stock is considerably tight in the entry-level category — and is being considerably outpaced by demand in that income bracket, while the supply-and-demand situation elsewhere in the market is less tenuous. Builders are looking to new construction to help fill that gap, with home lines marketed at young, price-sensitive first-time buyers rolling out in markets where that demographic is strong, including those in Phoenix and Houston.
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