The real estate market is one of the most surprising markets to have thrived throughout the COVID-19 pandemic. The year of 2020 saw growth not only in the amount of home improvement projects seen across the country, but also in the amount of flipped properties being sold. With an enhanced need for citydwellers to escape densely populated areas, small cities and suburbs have been especially attractive for people who sought to escape big cities like New York, Miami, and Los Angeles. In response, plenty of small to medium cities are experiencing a population boom which coincides directly with an increase in fix and flip sales.
Which Real Estate Market Had the Biggest Uptick in Fix and Flip Activity?
The number one rule for commercial real estate investing is to focus in areas in which you have familiarity, but that is not meant to keep you from starting to research outside of your primary zones. Given the scale of the COVID-19 pandemic, locations all around the country have seen increased growth of successful fix and flips. According to ATTOM Data Solutions, those areas with the biggest year over year uptick in the return on investment (ROI) on flips are:
- Dallas, TX (up 38%)
- Austin, TX (up 36%)
- San Diego, CA (up 20%)
- Chicago, IL (up 20%)
- Oklahoma City, OK (up 18%)
Which Markets Showed the Fastest Growing Fix and Flip Profit?
Some of these numbers may seem counterintuitive to the growth of small cities because cities like San Diego and Chicago are already major cities, but these areas have seen continued market growth due to the consistently increasing cost of living in formerly impoverished areas of the metropolitan districts. With the exception of San Diego, the above cities are also attractive to prospective flip-buyers because of the relatively large properties available close to city centers.
To better illustrate the nature of the fix and flip market, examine the below cities which provide the fastest growing improvement to a flipper’s return on investment:
- Little Rock, AR
- Memphis, TN
- Des Moines, IA
- Cedar Rapids, IA
- West Valley City, UT
Much more in line with the suggested trends of the 2020 year, each of these top five cities have a total population of less than 660,000 – less than 225,000 if you discount Memphis. The “small town charm” is still very much alive in these cities, providing for cheap properties in desperate need of renovation for fix and flippers. These flipped houses become especially popular with members of the “urban flight” movement from big cities due to the quaintness of the surrounding metropolitan areas. Who wouldn’t want a newly remodeled, modern home just steps away from the arts and culture of small cities which encompass the Americana culture?
The Eastern US Market Shows the Highest Standing Fix and Flip ROIs
The above lists show where cheap properties can be sold for a high degree of return – a close look highlights a trend which would suggest that you may not be able to make a high profit in the eastern portion of the country. This apparent trend is, fortunately, not true. Despite the higher cost of investment in eastern states, ATTOM’s data shows that the following five cities provide the highest standing ROI for flippers:
- Pittsburgh, PA
- Cleveland, OH
- Wilmington, DE
- Philadelphia, PA
- Columbia, MD
With many of these cities sitting squarely in the “Rust Belt” of the country, investors can find market steals on dilapidated homes that can be flipped for a massive return after sale.
Despite the changes in the popularity of major cities in the thralls of the COVID-19 pandemic, most of the country’s real estate markets remain hotter than recent memory could provide. If you’re looking to get into fix and flipping or are seeking resources to bolster your next project, contact us at EMCAP lending. Our goal is to help your fix and flips succeed!