The art of flipping houses can be an exciting business—the show Flip or Flop has a huge fanbase, and even celebrities like Ellen DeGeneres and Courteney Cox have gotten into the game. Now, a new study by Trulia shows that more and more people are taking advantage of house flipping. Of all the home for sales in 2016, 6.1 percent of them involved flipped houses, which is the highest percentage since 2006 and up from 5.3 percent in 2015.
House flipping is the act of buying a home, quickly fixing it up (either with smaller home improvement projects like painting or securing permits to build bigger additions or features), and trying to sell it at a higher value. The experts found that Las Vegas topped the list of housing markets with the largest share of flips for the second year in a row—the percentage was at 10.5 percent (up from 9.6 percent in 2015). And some investors are doing more than just repainting or replacing fixtures, the Trulia team found that 11.6 percent of flipped properties in Las Vegas had improvement fixes that included permit-approved work.
In addition to Las Vegas, other cities have seen significant increases: Detroit’s flipping activity jumped up 4.8 percentage points between 2015 and 2016, and Chicago’s grew by 2.8 percentage points.
To calculate these rankings, Trulia only looked at “traditional” property flips, in which someone purchases a house at market rate and sells it at a higher price due to improvements and rising prices. The experts disregarded “clearance” flips, which involved foreclosed or distressed homes. Trulia defined a flip as “a property that sold twice in a twelve-month period."
So what’s the reason for the increase in flips? Experts believe that rising home prices could be the answer. “In general, flipping homes require at least some growth in prices in order to entice investors to pick up their game,” Trulia chief economist Ralph McLaughlin wrote in a post. “Even though they can add value by improving the quality of a home, rising prices provide a safety net when taking on a project.”
Take a look at the top 10 housing markets with the largest share of flips below, and get more information on where your city lands in the rankings at Trulia.com:
- Las Vegas, Nevada
- Deltona-Daytona Beach-Ormond Beach, Florida
- Tampa, Florida
- Memphis, Tennessee
- Fresno, California
- Nashville, Tennessee
- Fort Lauderdale, Florida
- Atlanta, Georgia
- Knoxville, Tennessee
- Tacoma Washington