House flipping and foreclosures: they generally go hand-in-hand. People who are new to the business often think that house flippers depend entirely upon new foreclosures. But foreclosures are way down in California, and house flipping is up. How can that be?
The Numbers: Foreclosures & Flips in California
In 2016, foreclosed homes represented about half of one percent of all housing units in California. Altogether, that’s 78,646 foreclosure filings in the state last year, according to ATTOM Data Solutions. As a point of reference, those figures represent a 15% decrease in foreclosures from 2015 and a staggering 85% decrease from their all-time high in 2010.
Alternatively, across the country house flips made up 5.7% of all single-family home and condo sales in 2016. In California, the rate of house flipping was substantially higher. Home flips made up 10.1% of all California home sales in 2016, also according to ATTOM Data.
Factors Driving the House Flipping Market
With so few foreclosed properties, the house flipping market is being driven by a variety of other factors. First, home prices are still on the rise thanks to low supply and a strong economy. Second, flippers are expanding their horizons and looking into a wider array of market types. And third, the amount of available capital for house flipping loans has gone up substantially in recent years.
More and more house flippers are turning to outside sources for financing, making it possible for them to invest in bigger flips and more of them. In 2016, 31.5% of all rehab properties were purchased with financing, a six-year high. Altogether, there was about $12.2 billion in financing invested in house flips, a nine-year high.
The house flipping tips that made sense in the 1990s and early 2000s are a thing of the past. The market no longer relies on foreclosures but instead relies on smart investors ready to look for unique opportunities and take part in advantageous financial partnerships.
If you’re considering getting into the growing house flipping market, give us a call to learn more about the current market trends. Our experienced team can help you get a sense of what exactly goes into a house flip and provide you with fast, reliable funding if and when you’re ready.
