5. New Haven-Milford, CT
> Return on investment: 89.6%
> Avg. gross profit: $90,950
> Avg. flipped price: $192,500
> Number of flips: 258
> Flips, pct. of home sales: 3.0%
Home flippers in the New Haven-Milford metro area purchase properties at a discount of 38.1% from local market prices, and buyers are willing to purchase the flipped homes at a premium of 20.7%. The selling premium is the third highest of all metro areas considered. As in a few other top home flipping markets, wealthy homebuyers in nearby New York City may be more willing than New Haven area residents to pay the markups, helping home flippers turn their large profits. The commute from New Haven to New York City is roughly an hour and a half by train.
4. Cincinnati, OH-KY-IN
> Return on investment: 89.7%
> Avg. gross profit: $54,235
> Avg. flipped price: $114,700
> Number of flips: 1,496
> Flips, pct. of home sales: 5.6%
As is the case in most top home flipping markets, relatively cheap property in the Cincinnati area means investors risk less money when flipping area homes. The median home value of $152,100 in the area is well below the national median of $181,200. In the past 12 months, the typical flipped home was purchased for just $60,465, a discount of 46% compared to the estimate market value, and one of the lowest purchase prices of any metro area housing market.
3. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
> Return on investment: 98.4%
> Avg. gross profit: $84,788
> Avg. flipped price: $170,988
> Number of flips: 3,972
> Flips, pct. of home sales: 5.7%
The typical home flipper in the Philadelphia metro area is able to purchase a home at a 44.7% discount, and buyers are willing to purchase flipped homes at a premium of nearly 5%. As a result, home flippers manage to nearly double their investment, making the area more profitable for home flipping than all but two other metro areas. Blomquist suggested the success of investors in the Philadelphia area could be partially due to wealthier home buyers from the New York City area accessing the relatively affordable Philadelphia housing market. The train commute from Philadelphia is just over an hour, and many of these potential home buyers likely find the New York City area housing market prohibitively expensive.
2. New Orleans-Metairie, LA
> Return on investment: 99.2%
> Avg. gross profit: $74,700
> Avg. flipped price: $150,000
> Number of flips: 527
> Flips, pct. of home sales: 6.1%
In a number of other lucrative home flipping areas, home price growth from the end of 2010 was weak — if not in decline. In New Orleans, home prices increased by 14.4% from 2005. After hurricane Katrina decimated the area in August 2005, home prices were likely close to rock bottom. By contrast, home prices across the nation grew by just 1.8% over that 10 year period. Despite the home price increases, 9.9% of households in New Orleans earn less than $10,000 annually, and 18.1% of people live in poverty, the highest and 14th highest such percentages of metro areas considered by RealtyTrac.
1. Pittsburgh, PA
> Return on investment: 129.5%
> Avg. gross profit: $71,250
> Avg. flipped price: $126,250
> Number of flips: 840
> Flips, pct. of home sales: 3.2%
Pittsburgh is the only housing market where home flippers more than double their investments. With an average return on investment of 130%, home flipping in the area is the most profitable of any U.S. metro area. Nationally, home flipping as a percentage of ordinary home sales is still well below the levels from 10 years ago. In Pittsburgh, however, home flipping has gained in popularity. Since 2005, home flips as a percentage of all home sales in the area increased by 19%. Like in most lucrative home flipping markets, the median purchase price in Pittsburgh of $55,000 is well below the national median and one of the lower prices compared to other U.S. metro areas. This means flippers in the area are likely getting discounts on their investments.
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