Is Massachusetts the #1 State for Investment Properties?
Home flippers sold less than 900 homes in Massachusetts last year, but at a higher profit than in any other state. The average flipped home was resold for more than $300,000, and profits were more than $100,000 on average. Unlike many other states where home flipping was common, the foreclosure rate in Massachusetts was relatively low. One in every 287 homes were in foreclosure in 2013, better than most states. Home flipping in Boston has increased in recent years, perhaps due to the high likelihood of making a good profit. Home flippers in the Boston area earned $119,258 on average last year, much more than in the vast majority of metro areas. A&E even produced a second season of “Flipping Boston” last year, a show that follows the successes and failures of investors who fix and resell homes in the Boston area.
In 2013, investors bought more than 156,000 homes, only to fix them up and quickly resell them for an average profit of $58,081. Home flipping became increasingly popular as the housing market began to recover.
Buying homes to flip when market prices are relatively high may mean more overhead, but the fact remains that the states and metro areas with the largest average profits on home flips were the more expensive housing markets. All of the six most profitable states to flip a home in 2013 had among the highest average purchase prices that year. For example, California homes intended to be fixed up and resold for a profit cost an average of $284,650, nearly $100,000 more than similar houses across the U.S. Of course, they were then resold for an average price of $381,221. “High prices result in higher profits,” confirmed Blomquist. “These states are basically the highest-priced markets in the country.”
Blomquist added. “We saw a big increase in foreclosure activity in these areas, and some of that is related to properties homeowners were walking away from. Those homes are prime candidates for flippers. They probably have some damage that other buyers would shy away from, but a flipper would be willing to take on.”
-by: Thomas C. Frohlich and Michael B. Sauter