Flipping is certainly not flopping in Detroit.
The city led the market with the largest percentage jump in flipping gains last year, according to the real-estate site Trulia.
“Surprisingly, Detroit, which has been the poster child for the dilapidated and abandoned properties left behind by the foreclosure crisis, leads the country in increased flipping activity with a 4.8 percentage points jump between 2015 and 2016,” says Trulia in a recent article.
That’s good news.
The data says flippers are upgrading the homes, not just buying and waiting for the market to rise without making any improvements.
And that’s not all. It also shows investors see Detroit as a place to make a good profit as prices rise and it opens the door wider for many new homeowners.
“That movement creates competition for homebuyers who may be looking to build sweat-equity on their own, but it also provides improvements to the housing stock for buyers who don’t have time or cash to improve a home themselves,” says Trulia.
Home flipping is picking up nationally as well. According to Trulia, flipping increased to 6.1 percent of all home sales in 2016 up from 5.3 percent the year before.
Las Vegas did lead the country in the share of home sales made up of flips over the last two years, but of the 10 housing markets with the largest year-over-year increase in flips, seven are in the South and the other three in the Midwest.
Other markets where flipping activity has increased by two and three percentage points include Chicago, Knoxville, Tenn., Memphis, Tenn., and Fort Lauderdale, Fla.
In case you’re wondering, here’s how Trulia figured out the flipping increases. It differentiated between two kinds of flips. One is a traditional flip, which is the purchase of a house at market rate and selling it at a higher market rate price because of improvement to the property and/or rising prices. The other is a clearance flip, which is the purchase of a distressed house at a discount because of a forced sale, such as a foreclosure, followed by a resale at market rate. Clearance flips were not included because the goal was to estimate the relationship between prices and flipping in a relatively normal, non-distressed housing market.
Trulia’s definition of a flip is a property that sold twice in a twelve-month period, in which both transactions are considered arm’s length.
Investors certainly seem to be doing flips over the opportunities they have in Detroit.