As the homeownership rate falls, it becomes harder and harder to find buyers for a flipped home, depending on where you are selling. A new report form Wallethub examines where investors will get the most return on their flipped homes, based on a study of 170 U.S. cities.
Wallethub’s study cited Sioux Falls, South Dakota as the overall top city to flip homes, based on market potential, renovation and remodeling cost, and quality of life. Meanwhile, Pittsburgh; Cleveland; Wilmington, Delaware; Philadelphia, Pennsylvania; Columbia, Maryland, and Baltimore all tie for the top spot for highest average gross return on investment.
The most homes were flipped in Memphis, Tennessee. The second place spot for highest number of homes flipped, behind Memphis, is a tie between five cities in Arizona, including Phoenix, Glendale, Mesa, Chandler, and Scottsdale.
By cost, entire home flips were cheapest in Little Rock, Arkansas, followed by Memphis. Home flipping is the most expensive in California cities such as Fremont and San Jose, as well as Boston, Massachusetts.
The lowest return on investment was found in Manchester, New Hampshire; Nashua, New Hampshire; Boise, Idaho; Nampa, Idaho, and Austin, Texas.
According to Daren Blomquit, VP, Market Economics at Auction.com, home flipping serves as a good barometer of where the market is heading. In an interview with DS News, Blomquist stated that despite a decline in flipping in 2018, home flipping is on its way back up.
“The good news is that downward trend in home flipping reversed itself in early 2019, with the home-flipping rate jumping to a seven-year high in February,” said Blomquist. “That’s a strong positive sign for the health of the overall housing market going forward for the remainder of the year.”
Brittany Kielhurn, Owner, CEO at Carolina Community Investments & Professor at Duke University discussed the value home flippers bring to the market.
“House flipping by it definition means investors are putting their money into improving a worn down property,” Kielhurn told WalletHub. “Flippers therefore serve an important role in many communities where the housing stock might otherwise be left to continue deteriorating for lack of investment.”