Surprisingly enough, the house flipping industry more or less met expectations in 2017. There was no bubble burst as some experts feared, foreclosure rates remained low, and so did housing inventory levels. Here are some other key highlights from the past year in house flipping news:
Mortgage rates remained low. The current low 30-year mortgage rate allowed many Millennials and other buyers who had left the market for a while come back into the house-buying pool. A stable economy contributed to buyer confidence.
Home prices went up. Despite fears that we peaked in the housing cycle, home prices continued to rise nationwide throughout 2017. Renting was still a popular option among younger generations and some retirees due to high home prices boxing some buyers out of the market. The high prices also meant that house flippers had to get creative. With minimal foreclosed properties to rely on, many house flippers set their sights on higher-end properties, particularly in hot markets like San Francisco, Los Angeles, and Santa Clara.
House flipping loans grew in popularity. Another side effect of high home prices was that more house flippers sought out financing for their flips. A full third of house flippers in the US used financing to fund their flips in 2017, the highest level since 2008. Financing lets flippers invest in more expensive properties or invest in multiple properties at once. Financing also helps mitigate risks and ensures cash flow throughout the flipping process.
Housing inventories remained slow to catch up with demand. Relief from the lack of available housing may not come to home buyers until 2019.
But what will happen in 2018? Realtor.com has six main predictions. They include:
- Home prices will rise 3.2% next year, a slower rate than 2017.
- Mortgage rates will hit 5% by the end of 2018.
- Sales of existing homes will go up 2.5%, and new home sales will go up 7%.
One factor that could have a big effect on the housing market is the proposed GOP tax bill. If it passes, all of these predictions could be altered significantly, but it’s difficult to predict what will happen in this political climate.
What are your predictions for the 2018 house flipping market?
