The fact that the Bay Area is one of the hottest housing markets in the country isn’t exactly ground-breaking house flipping news. But you may be surprised to learn just how much home prices have increased here over the last five years.
According to The Mercury News, home prices in the Bay Area have effectively doubled over the last five years. You now need to make at least $179,390 per year in order to afford a median price home in the region. That median price point sits at $895,000.
The numbers get even more extreme when you focus in on the Bay Area’s most desirable areas. For example, the median home price in San Francisco is currently $1,450,000; in San Mateo it’s $1,469,000; and in Santa Clara County it’s $1,183,440. Put in terms of buyers, only 12% of potential buyers in San Francisco can afford a median priced home, only 14% can buy in San Mateo, and only 17% can buy in Santa Clara.
Affordability is a problem for buyers all over the state. When you look at California as a whole, the minimum family income needed to buy a median priced home is $110,890. The statewide median price is $553,260.
What does this mean for the house flipping industry?
The Bay Area still has some of the most lucrative markets for house flippers. The biggest gross profits routinely come out of San Francisco and Santa Clara. But traditional house flipping strategies may not be as effective here. There aren’t exactly a lot of underpriced properties or homes in a state of extreme disrepair. You can’t really focus on the low end of the market in the Bay Area, because the whole market is at the high end.
What house flippers can do is look for luxury homes that are out of date or in need of some smart remodeling. By opening up floor plans, updating fixtures and décor, and making some simple cosmetic fixes, house flippers can make excellent profits in the Bay Area.
The trick is getting your foot in the door. To be competitive in this market you will absolutely need to be able to make a cash offer, so having your financing in place ahead of time is a key part of being able to come out on top when an ideal property comes on the market.
Give our office a call today to secure your rehab loan pre-approval and take advantage of this exceptionally strong housing market.