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DC’s House-Flipping Salad Days Are Over, Investor Says

by Lark Turner

image
A flipped home on the market in Petworth.

A professional DC real investor says the city’s prime flipping days are over. Justin Pierce, a contributor to The Washington Post, wrote Wednesday that if you’re interested in flipping homes in the District, “you’ve probably already missed the window.”

Pierce — who, readers should keep in mind, has a vested interest in a less-competitive flipping market — argues that the ideal time to buy homes to flip them is when no one else wants to touch properties, such as when the market was depressed in 2008. That’s not the case in DC right now, where population is rising, home supply can’t keep up with demand and prices are steadily increasing. Using the example of Fairfax County, he points out that both home values and interest rates are going up while incomes are static. That means homes are becoming less affordable. We’ve previously written about DC’s rising home payments, which have gone up 24 percent in the last year alone.

In the article, Pierce predicts the following:

…Interest rates will rise and the market will level off and possibly even stagnate for a while. Real estate is not all mathematics. If people can’t get what they want for their home they will just stay put. You, as a real estate flipper, cannot. That flip home is like a huge weight around your neck. You have to get rid of it as soon as possible. In a rising interest rates scenario like this you’d have to make your home the absolute cheapest in the neighborhood to get it moved. The market may not drop 11 percent but you may have to.

He notes that he’s still flipping homes, but says finding the right properties to flip is getting more difficult.

In July 2013, the Post reported that flipping seemed at or near a peak in the DC region. At the time, Daren Blomquist, the vice president of RealtyTrac, warned of a coming slowdown.

“We’ll see the numbers taper back off. There’s a perfect storm for flipping right now. You’re really seeing a market that’s evolving from a distressed market to a recovering market so that’s a great window of opportunity for flippers. But once that window is gone and home prices normalize and the distressed properties have also normalized to a low level, then the volumes will go back down.”

What are you seeing on the market, investors? Let us know in the comments.

See other articles related to: flipping

This article originally published at http://dc.urbanturf.com/articles/blog/dcs_house-flipping_salad_days_are_over_investor_says/8368

15 Comments

  1. mona said at 3:32 pm on Wednesday April 16, 2014:

    That is to bad, the home pictured is a WSD property and they do good work but that house has been on the market for over 20 days

  1. Paula J said at 4:05 pm on Wednesday April 16, 2014:

    Flippers should be looking in the Park View neighborhood.  There are plenty of homes available for renovation and resale.

  1. Sarah J said at 4:35 pm on Wednesday April 16, 2014:

    The margins may be slimmer these days, but I think there are plenty of neighborhoods still ripe for the flipping in DC.

  1. Peter E said at 5:42 pm on Wednesday April 16, 2014:

    A “flipper’s market” isn’t an on/off thing. If someone can acquire an obsolete property and build value, that will be reflected in a higher out-sale price. The spreads are smaller than last year. The best time to have bought a DC property to flip was last spring. The next best time is right now!

  1. adam said at 6:24 pm on Wednesday April 16, 2014:

    The flippers in my neighborhood haven’t gotten the message.  I can think of 4 in-construction flips within a couple blocks of my house.

  1. GregK said at 7:24 pm on Wednesday April 16, 2014:

    This isn’t ‘FLIPPING’ and it’s pretty evident that those who call this sort of redevelopment/renovation, ‘flipping’ are just trying to sound like they know what they are talking about, when in reality, they really don’t.  A ‘flip’ is when someone sells a contract to purchase, before even closing, that, people, is ‘flipping’.

    If a developer buys, renovates and offers for sale a property, it’s called a renovation!  Puh-leeze get it right.

  1. DSS10 said at 8:23 pm on Wednesday April 16, 2014:

    I hope flipping ends in the district. Flippers really don’t do anything of value and most of the time drive up prices while taking affordable housing out of the market. Most of the flipped houses I have seen have been renovations to support an appraisal as opposed to adding value to a house.
    This combined with real-estate agents who favor investors over people who will occupy a house have really made the home buying process in DC a losing proposition.

  1. ben S said at 8:58 pm on Wednesday April 16, 2014:

    Urban Turf is now just regurgitating stuff from the Post that is written by a self-interested investor/blogger?  At least interview more than one source for your articles.  Also, buyers have had lots of issues with WSD homes. See that Petworth prince’s blog for comments.

  1. beenz said at 5:06 am on Thursday April 17, 2014:

    Ouch ben S. I personally had missed the Post article and was happy it was ‘regurgitat[ed]” here . Also, there are quite a few of us that are very pleased with our WSD homes - even if we do not post on pop.

    DSS10 your flip for appraisal theory is interesting and there may be substantial truth to it.

  1. RDHD said at 8:02 am on Thursday April 17, 2014:

    Whether it’s over or not, I just wish the quality of the work would increase.  I’ve seen more crap remodel jobs than I can count.  I’m sick of looking at a house and feeling like I have to redo people’s shoddy work.  Rip the walls out, historical details be damned!  Shove a 3 foot kitchen counter in one corner and put in over-priced “gourmet” appliances.  People don’t actually need to cook.  Then you renovate the bathroom with vessel sinks and make sure there’s tons of bland beige tile all over the place.  Same tile as on the floor?  Who cares; it was on sale.  Shove an extra “bedroom” in too, while you’re at it.  Who cares if it’s a shoe box.  And then ask more than $500k for it.  Blech.

  1. Rick said at 1:50 pm on Thursday April 17, 2014:

    LOL @ RDHD.  I concur.  The house my wife and I found last year had some development issues but not nearly the type that we had seen in other properties…

    Our house’s biggest flaw was the swing of several doors that had to be reversed or eliminated completely via pocket doors.

    If I see one more Glacier Bay vanity, faucet or toilet, I will vomit.  Mindless, cheap, contractor-grade junk.  If that brand is pervasive in any house you view, you know the developer cut corners and/or put as little thought into the house as possible.

  1. DSS10 said at 3:22 pm on Thursday April 17, 2014:

    @ RDHD & Rick,

    Don’t forget they have to put in 1,000 recessed lights, and the cheapest Pergo floors!

    I think urban turf should post the crappiest flip of the week…. They could call it “Flippin$%$!”

  1. Rick said at 3:39 pm on Thursday April 17, 2014:

    @DSS10,

    Good idea.  A few other best/worst “_____ of the week/month” ideas:

    - Pop-ups
    - Floor plan
    - Boutique condo

    We could have a field day plus bring a little transparency to the market…

  1. Justin Pierce said at 8:38 pm on Thursday April 17, 2014:

    I would just like to clarify.  I’m not saying that you can no longer flip a home in the D.C. area anymore.  I’m doing 4 renovations right now.  I’m just saying that it’s become more difficult. 

    This is a cautionary tale.  I see too many real estate guru’s selling courses that make home flipping sound easy.  This is a time for caution not exuberance.  That is my point.

    And, I agree with GregK, completely.  This really isn’t flipping but that’s what the general public calls it.  I really hate being called a flipper.

  1. nicoleallenB said at 1:05 am on Tuesday June 3, 2014:

    Flipping houses was a big trend for a while there, until the housing industry crashed. However, the quantity of people doing it has begun to increase. In boom times, vulture investors were home flippers looking for quick cash. In these troubled times, they are landlords raking in hefty, steady incomes.

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