Property flipping is trending again in Phoenix
The trend of house flipping earned a bad reputation during the housing boom, but experts are saying that the practice is gaining ground again. According to The Washington Post, real estate in Phoenix is being flipped at the quickest rate in the country. During the first half of the year, an estimated 10,000 properties were purchased, revamped and sold in the Valley.
Areas of the country that were the hardest hit by the housing crash, such as Phoenix, have seen the biggest increase in house flipping, as there are investors that often snatch up foreclosures and short sales for profit. With the current record-low interest rates, more people are eager to jump on a recently flipped property if they weren’t underwater on their mortgages.
The flipping market has shifted, though. Prior to the housing bust, many people that were flipping for profit were novice buyers who would purchase several properties at once, and turn them over in just weeks. Now, price appreciation is just starting to gain traction, but because many people aren’t comfortable with selling their homes for much lower than they purchased them for, most flippers are investors. Also, today’s flippers need to add value to a home before selling it, and often times they resell to other investors before putting homes on the market for the average homeowner.
“You don’t see any of that highly speculative flipping where it’s solely reliant on the home prices going up for the flip to work,” real estate expert Daren Blomquist told CNBC. “It’s probably easier to flip to another investor because this person is an experienced buyer and should have their ducks in a row in terms of being able to finance the property, if not pay up front in cash.”
Phoenix was a hotbed for foreclosures and short sales for quite some time, but there has been a noticeable drop off of these types of properties in the past couple months. Simultaneously, home values and housing inventory are both increasing, and some real estate experts believe there is a shadow inventory of properties that are in the process of being foreclosed but haven’t reached the market yet. However, there is no concrete evidence that there is a looming abundance of homes yet to be placed on the market in Phoenix and its general vicinity.