During the property boom in the U.S., the practice of ‘house flipping’ earned a bad reputation, thanks to speculators who bought and sold millions of homes in search of easy profits, but due to the real estate market’s recent sign of improvement, house flipping is once again gaining popularity.
According to research firm RealtyTrac, the number of flips rose 25 percent during the first half of 2012 from the same period a year earlier, and the gross profit on each property averaged $29,342.
Daren Blomquist, Vice President, RealtyTrac said the resurgence in flipping offers another indication that, in many parts of the country, housing prices have finally stopped falling.
“There are flippers in any market, but a market where home prices are appreciating is much more forgiving for flippers than a market where prices are depreciating,” Blomquist said. “We have turned that corner in a lot of places in the last six months, so that’s going to attract flippers.”
Areas of the country that were hit particularly hard by the housing crash have seen the most pronounced boom in flipping, as investors gobble up foreclosures and short sales — properties sold for less than the owners owe on the mortgage — and resell them to buyers eager to take advantage of record-low interest rates.
The Phoenix area leads the country with nearly 10,000 flipped properties during the first half of this year. Las Vegas, Los Angeles, Miami and Atlanta also are high on the list.
“Loan applications have tripled in the past few months,” said Justin Konz, an executive at Chantilly, Va.,-based Restoration Capital, a “hard money” lender that provides fast, short-term financing to flippers. Konz said the firm funds everyone from weekend warriors flipping a house or two a year to professionals turning around dozens of houses a month.
“We thought it would slow down in the colder months,” Konz said. Instead, he said, business has picked up heading into the fall, with few signs of slowing.
This article was first posted by The Miami Herald. Read the entire article here.