Fix and Flip Trends for 2017
Everyone wants to know where the housing market is heading in 2017. We already know that inventory is tight, which can be beneficial to sellers. Now, we take a look at 3 more housing market trends for 2017 and how they might impact your fix and flip business.
Millennials expected to be dominant buyers
According to Morgan Stanley, long-term housing demand will be consistent, driven by Millennials, who will be the majority of consumers who will buy a house in 2017. This is an opportunity for fix and flippers.
Given the tight supply of housing, millennials will need to consider older properties that could use some improvement. Across the United States, there are opportunities to rehab housing with good Return on Investment (ROI).
Realtor.com Chief Economist Jonathan Smoke predicts that Millennials will make up 33% of home buyers this year. He also thinks along with Millennials, Baby Boomers will be buying homes.
You have to consider location for your property investment. Many people are moving inland. This is due to more affordable housing and lower cost of living compared to cities like San Francisco or New York. Research your market to see how fix-and-flip property investments have fared over the last year.
Fix-and-flipping is on the rise
Trulia’s house flipping study saw that flipping is on the rise nationally. 6.1% of home sales in 2016 were from flips, compared to 5.3% in 2015. Las Vegas saw the most flipping activity at 10.5% of all sales. Detroit also saw a rise, with fix and flip activity 4.8% higher than 2015.
In areas where there is an influx of new residents, there is an opportunity. RealtyTrac’s “Top 30 Hipster Zips for Home Flips” analyzed single family homes and condos that were flipped in 2015 across the United States. If you’re looking at strict ROI, Newark, NJ (254.7%), Raleigh, NC (230.3%), and Philadelphia, PA (193.3%) were the best bets. Cities for technology jobs like Oakland, CA (87.5%), Seattle, WA (67.6%), and Berkeley, CA (52.6%) didn’t fare as well. This could be because home prices are already high and investors are trying to move through property quickly.
More value added flips
Trulia Chief Economist Ralph McLaughlin said,“We think flips are actually value-added improvements that investors are making to the house, rather than speculative flips.” This is a big difference because buyers of speculative flips were buying homes and waiting for prices to rise without adding any improvements.
Trulia sees that it’s less likely that property for flips were bought on speculation in recent years because 11.6% of Las Vegas flips had permit-approved work. Las Vegas doesn’t require permits for all property improvements, so Trulia believes because the amount of permits acquired means there was a significant improvement on the homes.
2017 could be a big year for fix and flips
The data suggests that 2017 could be a great year for the fix and flip market. Fix and flippers will work through the aging inventory and add value to property. The growth of the fix and flip market will continue to be fueled by the demand for housing. But the places with the most demand might not have the best return requiring more flips throughout the year.