Home Flipping Surges: Should We Be Worried?
Money + Markets

Home Flipping Surges: Should We Be Worried?

© Larry Downing / Reuters

Strong demand and rising home prices are prompting more investors to consider buying and selling houses as a means of making money quickly.

House flipping — buying and selling a house in less than a year for a higher price — increased in 2016 for the first time in three years, according to new data from Trulia. The share of home sales that were flips last year hit the highest level in a decade.

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The report showed that 6.1 percent of all home sales in 2016 were flips, up from 5.3 percent in 2015. That’s the highest level since 2006, when flips comprised 7.3 percent of all home sales.

Home flipping has historically occurred at high rates prior to market peaks. Home prices in 2016 were at their highest level in 10 years, and prices in many areas have returned to their pre-recession peaks, according to Trulia.

One in 10 home sales in Las Vegas last year were flips, making it the biggest city for flippers for the second year in a row. Among those sales, 12 percent showed permitted work had been done, so the flippers also invested some money in improving the properties. Flipping can be beneficial to buyers who don’t possess the time or money to renovate a home on their own.

Detroit and Chicago represented the cities that saw the biggest increase in home flipping, and both cities hit record high levels of flips.