The golden age of house flipping in the earliest years of this century was a time in which average, everyday Americans dreamed of buying a cheap home, putting in some granite countertops and crown moulding, and waiting a few weeks for the home price to rise and a seller, flush with cash, to come in and lock in a profit with a few strokes of the pen.
Fast forward to 2011. After five years of a real estate meltdown, would-be investors and home flippers, discouraged by free-falling home prices and an ailing market, wonder if those days will ever return.
Well, Taylor Swift seems to think so.
According to Foreclosure Deals, the 21-year-old country superstar recently put a red brick mansion in Nashville, TN on the market for $1.45 million – approximately $50,000 more than what she paid for it in 2011.
The home – a stately 4,929 sq. ft abode that was rumoured to have really been purchased by her parents – is only one of several homes that Ms. Swift owns, and it seems likely that it will find a buyer for the asking price. The difference is, on the surface, minuscule; a $50,000 gain is just a 3.45% profit. But, keep in mind this is a 3.45% profit over just three months.
Now that the young crooner/songwriter/real estate mogul proved that flipping is still alive and kicking – at least in some circles – what about the prospects for the rest of us? Is there still profit to be made in real estate?
Well, you do not have to be a curly-headed country singer in order to make a profit in real estate today. In fact, in some respects, buying and selling a home for profit is easier now than it was during the so-called golden age because it is more affordable for everyday Americans.
Consider this: The S&P/Case-Schiller Home Price Index is down a whopping 64% since its peak in 2006. Interest rates are also dirt cheap and can’t really fall any further. Plus, foreclosure inventory is high at 4.5% of all existing homes.
While it’s true that financing is hard to come by these days, and home prices aren’t rising every two seconds like they were at the beginning of this decade, the foundation for house flipping is still very much there. The fact of the matter is that homes are cheap, and prices are down. Demand is rising. The combination of readily-available supply and surging demand equals a price rise that can be expected to begin within the next year – by the end of 2012, from most estimates.
This just goes to show that you do not have to be Taylor Swift to flip a home. You may have to wait longer than a month or two – sorry, that’s one area in which being a famous and glamorous singer really helps – but average Americans can still play in the real estate market and walk out…well, like a star.
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