Where Home Flipping Is Growing, Fading

As the housing market slows down, home prices are stagnating and even falling in some major metros. New analysis tackles the impact on flipping houses for investors, and as a key future indicator for these markets.

The return on investment for flipping homes has steadily decreased from more than 42 percent to 38 percent, not including renovation costs which can be more than 20 percent of the home's purchase price, though the number of flips increased 3.5 percent in September, per Realtor.com analysis. Indeed, house flipping is expected to be buoyed by demand by Millennial buyers. According to Charles Tassell, COO at National Real Estate Investors Association, this buyer group "[wants] to move into a home that requires minimal work. A house that has already been rehabbed or flipped [and is priced lower than new construction] is really what they are looking for."

As well, Realtor.com researched and ranked the top 10 markets where flipping is growing, and the 10 where it's dropping in popularity. Raleigh, N.C. had the greatest growth, 63.4 percent, while flips dropped 18.8 percent in Columbus, Ohio.

The markets with the biggest drop in flips are those where prices are slowing down, such as larger coastal cities where costs got ahead of what buyers could afford. The places where flips are up tend to be smaller, more affordable cities getting influxes of new residents. And perhaps most surprisingly, some of the areas where this sort of speculative real estate investment contributed most to the last bubble, like Las Vegas and Phoenix, are where flipping is booming yet again.

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