The metro Las Vegas area led the nation when it came to flipping homes for the second year straight, but Metro Detroit showed the biggest increase in that practice in 2016 in the U.S. compared to the previous year, according to a report by Trulia, an online residential real estate site for home buyers, sellers, renters and real estate professionals.
The report looks at the 100 largest U.S. metropolitan areas.
The Metro Detroit real estate market showed that flips in 2016 jumped to 6% of all home sales compared to 1.2% in 2015, according to the study. Flipping a home essentially entails a person or company buying a home with the goal of reselling it for a profit. It often involves making improvements on the home before the sale.
In Las Vegas, flipping activity in 2016 increased to 10.5% of all sales in 2016, up from 9.6% in 2015.
"House flipping made a comeback in 2016, increasing for the first time in three years," wrote Ralph McLaughlin, Trulia Chief Economist. "On top of that, the share of home sales made up by flips last year was the most in a decade, and the third most since 2000."
"There are two reasons why house flipping trends matter," he wrote. "First, flipping is a speculative undertaking where investors are betting on turning a profit, and have historically occurred at high rates just before a market peaks. Second, flipping usually entails removing a home from a particular price point in the market and moving it to a higher price point through improvement. 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."
