Some Say Flipping is Hurting the Housing Market

The people saying that certainly aren’t engaged in flipping. Watching the house flipping “reality” shows on TV, it’s no wonder that everybody and their brother wants to jump into flipping. After all, it’s easy to grab up a dilapidated bargain, slap on some paint and new countertops, and sell at a big profit … right? Maybe.
Redfin pulled some average flipping profit numbers that certainly seem to bear out that it’s a major profit generator for many. The top 27 markets averaged $90,200 in profit per flip in 2013. California dominated the top of the list for average per-flip profit with:
• San Francisco $194,600
• San Jose $152,000
• Oakland $134,500
• Los Angeles $126,100
Down at the bottom of the list, the numbers still show the potential of the flip market:
• West Palm Beach, FL $57,700
• Raleigh-Durham, NC $55,000
• Charlotte, NC $53,100
• Las Vegas, NV $53,000
• Atlanta, GA $50,200
As the reality shows added tens of thousands of new investors to the pool, competition increased, and some investors are already priced out of the market. It takes more capital these days to be successful, but it’s still working for many. However, flips are taking longer to sell these days in many markets, and the profit margins are slipping.
It’s not necessarily a time to get over enthusiastic, but it’s also not a time to throw away the idea or business plan. Flipping isn’t going away, and we’re going to see a lot more money made fixing up houses for flips. In fact, the price range is moving up in some markets, leaving the cheap homes to newbies. More experienced flippers are buying nicer and larger homes and doing higher level rehabs.