Flipping luxury homes growing in popularity – for now
NEW YORK – Feb. 7, 2019 – Investors are taking on bigger projects and finding an increasing appetite for flipped high-end homes.
In 2018, 2.6 percent of homes valued at over $1 million were flipped, compared to 2.2 percent in 2017, according to data from realtor.com, which analyzed markets where at least 20 flipped homes sold for more than $1 million from January to October 2018. They define "flip" as a home that sold twice for a profit within one year.
The markets seeing some of the largest number of luxury housing flips are in California, particularly the Los Angeles, Long Beach and Anaheim, where the percentage of luxury home flips increased from 3.4 percent in 2017 to 4 percent in 2018.
"It was one of the fastest-growing luxury markets last year overall, so it's a function of sales being higher and growing at a healthy pace, which can result in flips growing at a healthy pace," Javier Vivas, director of economic research at realtor.com, told Mansion Global. "The share of inventory above $1 million in Los Angeles is large, too, and above most other markets."
International buyers are targeting the area for flips as well, says Santiago Arana, a broker with The Agency in Los Angeles.
While luxury home flipping homes is rising across the country, activity is still lower than it was a decade ago, says Vivas.
Luxury home flipping in many markets could taper off though this year, too. Housing analysts point to changes in the U.S. tax code that could make investors more reluctant to take on bigger purchases this year.
"Buyers and sellers are adjusting their expectations," Vivas says. "We're already seeing a lot of that with price reductions and increases in the amount and types of price cuts happening above the $1 million mark."
Source: "Luxury House Flipping Is On the Rise, But Still Lower Than Before the Recession," Mansion Global (Feb. 3, 2019)
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