• Zero Flux
  • Posts
  • Home Flipping Is Suprisingly Gaining Popularity Again

Home Flipping Is Suprisingly Gaining Popularity Again

Plus, Rents Are Falling and Rising the Most in These Places and 6 more handpicked RE insights

Want to unsubscribe? Scroll to the bottom of the email to see the link.

Please note: I send an email every weekday at 6:45 ET, so if you don’t see the email in your inbox in the future, please check other folders. 🙂

Estimated read time: 3 minutes 34 seconds.

Real Estate Trends

Home Flipping Sees a Revival link

  • Home flipping is witnessing a resurgence with investors making a gross profit of about $66,500 on a flip in Q2, representing an 18% increase from Q1, but still 35% lower compared to last year. However, these profits do not account for the remodeling costs, which can be 20% to 33% of the home’s sale price.

  • The Macon, GA, metropolitan area had the highest flipping rate, at 16.8% of all home sales. It was followed by Columbus, GA, at 15.3%; Spartanburg, SC, at 13.5%; Atlanta, at 13.5%; and Akron, OH, at 12.5%. (Only metros with at least 200,000 residents and at least 50 flips within the second quarter of the year were measured.)

  • Flippers made the highest profits in the Midwest and Mid-Atlantic regions. Akron had the highest returns on investment, at 116.7%, followed by Pittsburgh, at 112.9%; Scranton, PA, at 93.7%; Hagerstown, MD, at 86.6%; and Trenton, NJ, at 85%.

  • Flips were the least common in some of the nation’s priciest housing markets.The Seattle metro had the lowest flipping rate, at just 3.7% of sales. There were also fewer flips in Santa Rosa, CA, at 4%; Silicon Valley’s San Jose, CA, at 4.2%; San Francisco, at 4.3%; and Hilo, HI, at 4.3%.

Multifamily Is Most Attractive Asset Class, Survey Finds link

  • Apartments are the prime focus for investors, as revealed by CBRE’s Global Investor Intentions Survey, emphasizing a shift in investor preference towards multifamily properties.

  • The survey, conducted in late 2022, highlighted multifamily properties as the most targeted asset class, surpassing other property types for the first time.

Rents Are Falling and Rising the Most in These Places link

  • Rental prices in the 50 largest metros saw a median drop of 0.6% in August, marking the fourth consecutive month of year-over-year declines for various property types, yet they remain 23.7% above pre-pandemic levels.

  • Rents fell the most in Austin, at -8% year over year in August. The metro was followed by Tampa, FL (-5.5%); Dallas and Raleigh, NC (both -5.4%); Portland, OR (-5.2%); San Francisco (-4.9%); Orlando, FL, and Riverside, CA (both -4.8%); Las Vegas (-4.6%); and Phoenix (-4.5%).

  • The biggest bump was in New York City at 6.5%. Cincinnati had the second-largest jump, at 6.2%. It was followed by Richmond, VA (5.9%); Washington, DC (4.9%); Louisville, KY (4.4%); Milwaukee (4.3%); Indianapolis (3.9%); Oklahoma City and Pittsburgh (both 3.4%); and Detroit (3.3%).

The housing market's post-pandemic sales rebound has been wiped out by high mortgage rates link

  • Existing home sales in August fell to an annualized rate of 4.04 million units, even below the pandemic low of 4.09 million, due to higher mortgage rates and a limited supply of homes. This represents a 0.7% decline from the prior month and a 36% decline since early 2022.

  • Despite the decline in sales, home prices are still on the rise, with the median price of existing homes in August jumping 3.9% year over year to $407,100. This is attributed to the limited supply of homes available, with the inventory of unsold existing homes falling 0.9% to 1.1 million.

  • The National Association of Realtors highlights that the supply needs to double to moderate the gains in home prices. The ongoing trends of declining home sales and rising home prices are expected to continue, especially with no immediate Federal Reserve interest rate cuts on the horizon.

Risks

Why Extreme Heat-Related Property Risk Is the Next Significant Business Hurdle link

  • Climate risk analysis reveals that properties exposed to extreme heat and associated weather hazards could incur billions in reconstruction costs. Shifts in weather risks due to extreme heat can also alter homeowners’ insurance pricing, availability, and affordability, impacting properties inside and outside the extreme heat belt.

  • CoreLogic’s models indicate that natural hazard risk will intensify in areas within the extreme heat belt, affecting ZIP codes that have experienced at least one 104-degree Fahrenheit day since 2000. These areas are more prone to severe storms, cyclones, and inland flood risks, potentially impacting 250,000 homes worth $69 billion in reconstruction costs by 2030.

Something I found Interesting

1 in 5 Millennials Believe They’ll Never Own a Home link

  • A recent survey reveals that nearly 18% of millennials and 12% of Gen Zers believe they will never own a home, reflecting a significant portion of the population with diminishing homeownership prospects.

  • The survey, conducted by Redfin, included over 5,000 U.S. residents who have moved in the last year, plan to move in the next year, or currently rent their home, providing a diverse perspective on homeownership aspirations and challenges.

  • This data underscores the prevailing challenges and perceptions surrounding property acquisition for younger generations, potentially impacting future real estate markets and investment strategies.

Location Specific

Rent Growth in Springfield, MA Defies U.S. Trends link

  • Springfield, MA experienced a surge in rent growth, reaching near double digits and defying the national trends, with an 11% increase in effective asking rents, marking a historic high.

  • Despite the substantial growth, Springfield maintains relative affordability with rents averaging $1,702 in August 2023, notably below the Northeast region and U.S. averages, at $2,210 and $1,824 respectively.

  • The market has seen minimal new supply, with only 335 units added over the past decade, contributing to tight occupancy averaging 97.6%, and standing at 97.1% as of August 2023.

That's all folks. If you enjoyed today's issue, please reply (it helps with deliverability)

Cheers,

Vidit

P.S. Want to sponsor? Details here.

Subscribe for free to keep reading

This content is free, but you must be subscribed to Zero Flux to continue reading.

Already a subscriber?Sign In.Not now

Join the conversation

or to participate.