Special Report

Ten Best Markets to Flip a House

Economically depressed areas, which tend to have low housing prices, often draw home-flippers. But these are not necessarily the best home-flipping markets. As Blomquist noted, the balance between low prices and a flipper’s ability to successfully sell a property is both crucial and delicate. “Investors in [the best] markets may have to go against the grain a bit by diving into a market where there are still a lot of foreclosures,” Blomquist added. But “going against the grain, when done with careful research, is often the best way to beat out the competition and maximize profits on flips.”

Residents of many of the best counties for home flipping also earned considerably less than the typical price of an area property. Buyers in nine of the 10 counties best for home flipping had to shell out at least two times the county’s estimated annual median income to buy a home. In Bergen and Montgomery counties buyers paid 4.5 and 3.8 times the estimated median household income for 2014, respectively, both among the highest ratios nationwide. This primarily reflects recent gains in home prices in these areas. Blomquist explained that higher-priced markets allow flippers to sell their refurbished properties at attractive prices relative to the rest of the market.

Notably, half of the best counties for home flipping were located in Maryland, where a majority of key home flipping components seem to converge. Not only is Maryland a market where foreclosures have been increasing in recent years alongside rising home prices, but also the state’s economy is also relatively strong. According to Blomquist, this is likely due in part to the strong presence of government and government-related jobs in the state.

In order to be considered as one of the nation’s best housing markets for home flipping by RealtyTrac, counties had to have 100 or more single-family home flips between April 2013 and March 2014. Additionally, average gross returns on flips in these counties had to exceed 30% during this period. Gross returns do not include the costs associate with renovating a home. Counties also had to have below average unemployment rates as of March, a major indicator of economic strength. Finally, counties also had to have had a year-over-year rise in foreclosure activity in the first quarter of 2014, indicating ample inventory of potential properties for home flipping. Data on median home prices by county, as well as flips as a percentage of sales, by metropolitan area, are also from RealtyTrac. Data on median household income represent RealtyTrac estimates for 2014.

These are the 10 best markets for home flipping.

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