10. Montgomery County, Md.
> Return on investment: 38.9%
> Increase in foreclosures: 8.6%
> Unemployment rate: 4.5%
> Number of flips: 179
Close to Washington D.C., Montgomery County is home to some of the nation’s most expensive real estate. Between April of last year and this March, a typical home in the area sold for $372,000. Expensive real estate markets are not necessarily preferred for home flipping. In fact, economically depressed areas tend to attract flippers more than other areas, but these are not necessarily good home flip markets. In the case of Montgomery County, flipping expensive homes has been quite lucrative. Flippers bought homes for $347,682 on average and sold them for $482,969 on average. The high prices are not particularly surprising. RealtyTrac estimates the area’s 2014 median household income to be nearly $100,000, among the highest of any market. Also, 4.5% of workers in the region were unemployed as of March, considerably better than the national unemployment rate of 6.7%.
9. Bergen County, N.J.
> Return on investment: 40.8%
> Increase in foreclosures: 43.2%
> Unemployment rate: 6.3%
> Number of flips: 114
The number of foreclosures reported in Bergen County during the first quarter of 2014 increased by 43% compared to the same quarter the year before, among the larger increases nationwide. More foreclosures means more inventory for home flippers. The county’s relatively high foreclosure rate may not be surprising, as area homes are often especially expensive. The median price of a home in the area of $390,000 was significantly more than four times the area’s 2014 estimated median household income, a higher ratio than most markets. Without accounting for repair costs, flippers were able to resell the properties for roughly $130,000 more than their initial investments of 320,010 on average, a gross return on investment of nearly 41%.
8. Wright County, Minn.
> Return on investment: 45.2%
> Increase in foreclosures: 14.2%
> Unemployment rate: 6.4%
> Number of flips: 295
Like several other strong home flipping markets, flipping activity in recent years has declined considerably in the Minneapolis-St. Paul metro area, which includes Wright County. At the end of 2012, more than one in five metro area home sales were flips. A year later, this rate had declined to less than 3% of sales. However, home flipping is still quite active in the area. There were nearly 300 flips in Wright County between April 2013 and this March, more than in the vast majority of housing markets. Home flipping was also lucrative, with flippers getting a gross return of more than 45% on average, over that period.
7. Anne Arundel County, Md.
> Return on investment: 47.6%
> Increase in foreclosures: 16.2%
> Unemployment rate: 5.3%
> Number of flips: 146
Anne Arundel County, one of several lucrative flipping markets located in Maryland, has among the nation’s most valuable homes and some of its wealthiest residents. RealtyTrac estimates the area’s 2014 median household income at $95,275, more than all but a handful of counties. When compared to home prices, however, area incomes represented about a third of a typical home price of $276,050 last year. The particularly high income to home price ratio could partly explain the region’s rising foreclosure rate. Additionally, it may explain the area’s appeal to home flippers, who can potentially sell refurbished homes at attractive prices to buyers. Between April 2013 and March 2014, the gross return on investment for a home flip was nearly 48%, higher than in the majority of U.S. counties.
6. Saint Mary’s County, Md.
> Return on investment: 48.7%
> Increase in foreclosures: 40.0%
> Unemployment rate: 5.2%
> Number of flips: 321
There were 321 home flips in Saint Mary’s County between April 2013 and this past March. As is the case in many Maryland real estate markets, Saint Mary’s also had high home prices and high foreclosure rates. The area was extremely popular among flippers in 2013. Home flips accounted for more than 20% of all the metro area home sales in all four quarters of 2013, among the highest proportions nationwide. And in the third quarter of last year, 36.6% of home sales were flips, more than all but two other urban areas at that time. This year, however, the number of home flips dropped sharply. In the first quarter, just 2% of sales were flips. Home flipping activity may rebound, however, as foreclosure rates were up 40% in the first quarter of 2014 versus the year before, providing extra inventory for flippers. Real estate investors were able to turn a 48.7% gross profit on home flipping over the 12 months through March.
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