Home Flipping Is on the Rise
Home flipping sometimes means a good profit for home sellers, but it could also spell trouble for the housing market by increasing home prices and making homes less affordable for potential buyers, experts warn.
The number of active home flippers in 2015 was at the highest level in the past eight years, according to RealtyTrac. The average gross profit—the difference between the purchase price and the sales price of the flip—from home flipping also hit a 10-year high at $55,000. Flips made up 5.5 percent of all home sales in 2015.
Home flipping is any transaction that occurs on the same property twice within 12 months.
“Flipping tends to be done by investors, usually smaller investors, who think a market is undervalued and will typically invest in anywhere from one to three properties at a time,” says Julia Dugger, director of marketing and vendor performance management for Fannie Mae.