Some of the country’s hottest housing markets are seeing steep rises in home flipping and, as Reuters reports, this is leading to concerns that local housing bubbles could be developing.
Home flipping in 12 metro areas exceeded peaks set in 2005, which was just two years before the U.S. mortgage market began to crumble and the Great Recession began.
Profits generated by home flipping and the number of flippers both increased to pre-recession numbers, as well. Flippers gained an average of $55,000 per sale before renovation and transaction costs. In more expensive areas like New York and Los Angeles, that net gain reached $100,000 per flip.
Florida had the largest increase in flipping, as Lakeland, Jacksonville, and Homosassa Springs all saw their home flips rise 40 percent to 50 percent. Other hot spots were Pittsburgh, Memphis, Buffalo, and Cleveland.
The problem with all of this flipping is that, historically, an increase in flipping numbers is an indication that the housing market is in trouble. Overall, 179,778 homes were flipped in 2015. The good news is that was still far below the 2005 peak of 259,192.
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