across the country, yet down in Massachusetts
The prospect of home flipping is undoubtedly a risky
one yet it can be quite the lucrative opportunity. Across the
United States the frequency of home flips over the past couple of
years has seriously been on the up while in Massachusetts they are
not as popular or likely to succeed. The lower prices seen
throughout the country, although certainly rising, have created an
ideal moment for investors to take advantage of depressed homes to
then resell them within six months on a profit.
This six month measurement is often used to define a
house flip where a property was purchased and then resold all
within that allotted time. Over the past year, home flips have
increased by 19% nationwide and by an even larger 74% since the
first half of 2011. These statistics, coming from the online
marketplace for real estate data known as RealtyTrac, discovered
that there were 136,184 total house flips already this year from
January through June. Throughout these transactions, the investors
profited an average of $18,391, or 9% more than their original
purchase price. As a comparison, looking to the same corresponding
first half of 2012, this years numbers far and away exceed 2012s
average profit of $5,321; a 246% boost year-over-year.
What investors try to do and often succeed at is
securing the margin where they are buying properties at 5% or more
below the estimated market value of the home to then sell it at 1%
or more over the same market value within six months. Daren
Blomquist, the Vice President at RealtyTrac, mentions that, While
flipping continues to be profitable in most markets, particularly
those where the home price recovery is still nascent and a recent
rebound in foreclosure activity allows investors to find distressed
inventory at a discount, home flipping is tapering off in markets
where fewer of those distressed bargains are available.
Looking to Massachusetts in particular, there were just 593
single-family homes flipped during the first half of this year with
an average price of $289,029. This amount of sold properties, as it
comes to be known, is down 36% from the first six months of 2012.
Experts agree that the soaring real estate market in the Bay State
is much to do with the disparity between our local figures and
those that the greater nation is realizing. RealtyTrac analyzed 100
markets across the United States and determined that only 32
(including the Greater Boston Area) had declining rates of house
flips. The other roughly two-thirds of the country, on the other
hand, reflected the previously discussed growth in flips seen
throughout much of the country. The rising prices in Massachusetts
and overall stronger market has ultimately made it difficult for
investors to locate properties here on the cheap to where it can be
even considered worth the financial risk.
More Information: Boston Business
Journal