- The US housing market could see an wave of inventory thanks to a rise in home flipping.
- Fix-and-flip investor activity has already been on the rise this year, brokerage New Western said.
- The firm estimated as many as 24 million homes could present an opportunity for fix-and-flip investors.
The housing market could see a wave of much-needed inventory in the coming years, thanks to as many as 24 million homes entering prime age for renovation, presenting an opportunity for fix-and-flip investors, according to New Western.
The real estate brokerage said a shift could be coming in the US housing market next year and could continue through 2027, thanks to a wider market of homes available to real estate investors focused on buying and renovating older homes to put them back on the market.
Home flipping already appears to be on the rise in pockets of the US. New Western investor activity in cities like Houston, Texas, Raleigh, North Carolina, and Atlanta, Georgia are up over 20% in the second half of the year compared to the first half, the firm said.
“The steady beat of, what we like to call The Great Renovation will continue into 2024. The prime remodel years for homes will rise into 2027, with 24 million homes ripe for major renovation,” New Western said in a recent report.
That could spell good news for the housing market, which has been slammed with a shortage of inventory over the past year amid high mortgage rates. Rates have cooled from recent highs, but homeowners are still hesitant to let go of ultra-low rates at which they financed their homes years ago.
Over 90% of US homeowners with a mortgage are financed at rates below 6%. The housing market, meanwhile, had just 1.5 million homes for sale in October – about a 34% decline from October 2018, when inventory clocked in a 2.3 million, Redfin data shows.
Markets, though, are feeling more positive that inventory levels will improve in 2024. The National Association of Homebuilders is forecasting a 5% increase in homebuilding starts next year. Fix-and-flip investors will also be a critical resource in boosting the supply of homes, New Western said.
“Demand is high for new homes but timelines are long and only a small percentage of new homes are being built in the affordable range. Builders are definitely a solution but the independent investor is an overlooked resource and often doesn’t have to contend with as stringent regulations as builders,” the report added.
More inventory added to the housing market could be key to making housing more affordable, as tight supply has pushed prices higher over the past year. The median US home price has hit $413,000, Redfin data shows, nearly double the $278,000 price tag recorded five years ago.
