Nationwide home flipping was down in 2018, but many investors are continuing the hunt for bargains. The primary focus for investors continues to be in the lowest-priced areas of the country, where levels of financial distress remain highest.
Home Flip Trends in 2018:
- Decrease in average time: Homes flipped in 2018 took an average of 180 days to complete, down from 181 days in 2017.
- Decrease in square footage: The average square footage of homes flipped in the fourth quarter was 1,408, the smallest average square footage on record for CoreLogic’s report, dating back to the first quarter of 2005.
- Decrease in Financing: Thirty-six percent of all homes flipped in the fourth quarter were financed, down from 39.5 percent a year ago.
While the average price per home in the Augusta and Chattanooga markets continue to increase, by 6% and 8% respectively, the overall prices remain below national average. And the opportunities for investing remain ripe as the economic development of these areas continue to strengthen; attracting renters and new home buyers into the markets. Many investors are looking at areas that were once hit hard by financial hardship and seeing opportunity for growth as mortgage rates hold steady and the number of jobs increase, resulting in greater demand for housing. Greater demand paired with steady increases in home values is attractive to investors who wish to hold onto their properties for the purpose of generating rental income and asset building.
Another attractive quality for investors in Tennessee, and Georgia and South Carolina, along the Savannah River is the level of economic market freedom. Economic market freedom, as defined by Dean Stansel for the Reason Foundation, is the freedom of the individual or business to use their resources as they wish without undue interference from the government. This is important, as it promotes prosperity. These markets tend to experience population growth and economic opportunities for all. Augusta ranked 74th and Chattanooga 59th in the under 1 million study placing them in the top 25 percent of MSAs with the most economic freedom.
As with many other national real estate trends, we anticipate our markets to remain steady with continued growth. There doesn’t appear to be a slow-down in sight for the foreseeable future.
Sources:
“Home Flipping Slowdown Could Be Temporary, Report Says,” Realtor Magazine (Mar. 1, 2019)
“Ranking U.S. Metropolitan Areas on the Economic Freedom Index,” Reason Foundation (Jan. 31, 2019)