Flipping a house? The 10 best cities for flippers.
The housing market is poised to once again become fertile ground for flippers in 2013. House prices are rising, inventory is tight, and a wide availability of distressed homes in some cities make prime targets for seasoned investors with cash on hand. Foreclosure listings site RealtyTrac has compiled a list of the best metros for flippers, based on gross profit percentage on single-family homes in 2012. These are the Top 10. Can you guess which city is No. 1?
10.Tucson, Ariz. (34 percent gross profit)
A new home being built in the Catalina foothills near Tucson, Ariz. Arizona's housing market was decimated when the housing bubble burst. Since then, prices have been increasing dramatically across the state.
(Alfredo Sosa/Staff/File)
Total housing units: 438,892
Single-family flips: 1,071
Average pre-flip purchase price: $117,337
Average flipped price: $156,685
Like Arizona on the whole, Tucson’s market was left in shambles after the housing bust. One in 4 homes in Arizona are currently underwater, making its metros ideal for investors to snap up real estate for rentals and resale. Prices are rising, but they are still quite low: The median home price for the Tucson area is $172,000.
Two factors make a market prime for flippers. The first is rapid price appreciation, currently being seen in cities in Arizona, Nevada, and parts of California with housing markets that have nowhere to go but up. The second is a high number of foreclosed properties, which seasoned real estate investors can buy outright at auctions and flip for big profits. Tucson, for instance, also ranked ninth on RaltyTrac’s list of the best cities to buy foreclosure homes.
When it comes to flip markets, two states dominate the others. 11 of the metros on RealtyTrac’s top 25 list were in California. But Florida dominated the top 10, boasting five of the top 10 metros for flippers.
9.Sarasota-Bradenton-Venice, Fla. (34 percent)
Tampa Bay Rays starting pitcher David Price throws during the third inning of an exhibition spring training baseball game against the Baltimore Orioles in March in Sarasota, Fla.
(Carlos Osorio/AP/File)
Total housing units: 399,624
Single family flips: 999
Average pre-flip purchase price: $116,783
Average flipped price: $156,983
The success of Sarasota’s housing market is closely tied to the job market in the northern United States: The more jobs improve, the more workers retire and demand housing down in Florida. And Sarasota is prime real estate. It’s on Florida’s Gulf Coast between Tampa and Fort Myers, with two private colleges and a decidedly small-town feel.
8.Nashville, Tenn. (35 percent)
The Cumberland River flows by downtown Nashville, Tenn., at sunrise.
(Mark Humphrey/AP/File)
Total housing units: 661,507
Single family flips: 1,203
Average pre-flip purchase price: $108,851
Average flipped price: $146,871
Home sales and prices are clipping along nicely in the greater Nashville area: Existing home sales are up 24 percent from a year ago, and the median home price improved from $179,000 in 2012 to $195,000 by May of this year. And inventory is tightening, with the number of available single-family homes shrinking by nearly 3,000 over the past year.
7.Lakeland, Fla. (37 percent)
A Publix supermarket in Zephyrhills, Fla. Publix is headquartered in nearby Lakeland, and it is that city's largest employer.
(Scott Iskowitz/AP/File)
Total housing units: 279,959
Single family flips: 660
Average pre-flip purchase price: $68,444
Average flipped price: $93,715
Lakeland had the second-lowest pre-flip purchase price in the top 10, narrowly edged out by Memphis Tenn. Located in the center of the state and relatively far from the coasts, it’s among Florida’s lower-priced markets. The area’s largest employer is Publix Supermarkets, one of the largest regional grocery stores in the Southeast. Publix's corporate headquarters and large warehouses are in Lakeland.
6.Miami-Fort Lauderdale-Pompano Beach, Fla. (37 percent)
Dozens of boaters enjoy their Memorial Day holiday near a sandbar near Baker's Haulover Inlet in Biscayne Bay, Monday, May 27, 2013, in Miami Beach.
(Wilfredo Lee/AP/File)
Total housing units: 2,457,814
Single family flips: 4,299
Average pre-flip purchase price: $138,064
Average flipped price: $189,291
Inventory for homes in the greater Miami area is very low – less than six months’ supply across all price ranges, and less than one month’s supply for homes priced under $200,000, according to the Miami Herald. This metro has the largest population in the Top 10, with just over 5 million residents.
5.Memphis, Tenn. (42 percent)
Shahad Almutshir practices his soccer skills on a trip downtown to Memphis's Mississippi River Park with his father Hekmat Almutshir, left, in April.
(Jim Weber/The Commercial Appeal/AP/File)
Total housing units: 548,533
Single family flips: 1,331
Average pre-flip purchase price: $68,317
Average flipped price: $96,869
Memphis is the largest city by population on the Mississippi River, as well as the largest city in the state of Tennessee (Nashville currently has the largest surrounding metropolitan area, however). Considered the poorest city in the US by median income, Memphis has the lowest average pre-flip purchase price for a single-family home in the Top 10.
Earlier this year, Memphis's city council renamed three of the city's public parks to distance itself from Confederate historical ties. Jefferson Davis Park, for instance, was renamed Mississippi River Park.
4.Tampa-St. Petersburg-Clearwater, Fla. (43 percent)
Convention-goers cruise on a Freewheelin pedal bus at the Republican National Convention last year in downtown Tampa, Fla.
(Scott Iskowitz/Invision for Humana/AP/File)
Total housing units: 1,346,980
Single family flips: 3,033
Average pre-flip purchase price: $79,538
Average flipped price: $113,676
The Tampa Bay area has a lot going for it: In 2008, Tampa was ranked one of the top 5 "Outdoor Cities" by Forbes, and a 2004 survey by the NYU magazine "Washington Square" named it a top city for "twenty-somethings." Nearby St. Petersburg is a popular retirement community with a celebrated fine arts scene, including the Salvador Dali museum. Nearby Clearwater Beach was named "Florida's Best Beach Town" in January by USA Today readers.
3.Phoenix-Mesa-Scottsdale, Ariz. (44 percent)
A realtor and bank-owned sign is displayed near a house for sale in Phoenix in January 2011. The Phoenix area's housing market has improved dramatically in the past year, with prices rising and the foreclosure rate in freefall.
(Joshua Lott/Reuters/File)
Total housing units: 1,776,467
Single family flips: 10,589
Average pre-flip purchase price: $146,527
Average flipped price: $210,289
Also known as the "Valley of the Sun," the Phoenix area is the sixth-most populous metro in the country, and Phoenix is the most populous US state capital. Home prices in Phoenix have jumped 22.5 percent over the past year (the biggest year-over-year jump in the US), and inventory is tightening. The foreclosure rate, too, has dropped sharply over the past year, from 2.7 percent a year ago to 1,2 percent in April 2013.
Phoenix had by far the largest number of flips on the list, at 10,589. The next-highest total was Las Vegas, with 4,341 flips.
2.Las Vegas (53 percent)
Carpenters work on new homes at a residential construction site in the west side of the Las Vegas Valley in Las Vegas in April. The once-beleaguered Las Vegas housing market has been on fire since investment firms began buying homes here.
(Steve Marcus/Reuters/File)
Total housing units: 829,544
Single family flips: 4,341
Average pre-flip purchase price: $133,198
Average flipped price: $203,944
Las Vegas posted the third-biggest home price gains in the US in April, behind Phoenix and San Francisco. Builders there are buying up land in anticipation of the market for new homes taking off over the summer. Vegas's foreclosure market has been swarmed by institutional investors, who buy up distressed properties to turn into rentals.
1.Orlando-Kissimmee, Fla. (63 percent)
Fireworks go off around Cinderella's castle during the grand opening ceremony for Walt Disney World's new Fantasyland in greater Orlando. The Orlando-Kissimmee metro area, home to Disney and Universal theme parks, was a top market for flippers in 2012.
(Scott Audette/AP/File)
Total housing units: 932,729
Single family flips: 1,912
Average pre-flip purchase price: $103,701
Average flipped price: $168,677
Like the other metros on the list, Orlando's high flip profits come from a combination of low housing inventory, climbing prices, and interest from foreign investors.
Even as the flip market grows, its unlikely that 2012's huge resale profits in these cities are sustainable. Foreclosures are dwindling nationwide, and home prices will eventually stabilize, bringing resale margins into the more usual 20-30 percent profit range.
