Areas with rapidly rising home prices tend to be great markets for flipping houses. And since home prices have been on the rise, last year's home flipping market was the hottest it's been since 2005. But what goes up, must come down and no one wants to be in the middle of a flip when the market shifts.
RealtyTrac says that flips made up 5.5 percent of all U.S. home sales last year. That's about 180,000 single-family homes and condos, which is up from 5.3 percent in 2014 and represents the first increase for house flipping in four years.
But house flipping varies from place to place. RealtyTrac analyzes data from 110 U.S. cities and says house flipping activity rose in 83 of them last year.
The real estate tracking firm says as home prices rise, more house flippers jump into the market, which also helps push those prices higher. RealtyTrac defines a flipped house as one that's bought and sold in a 12-month period, at a profit, of course.
And while house flipping is a sign of confidence that prices are heading up and not down, it can also be a sign of trouble for the hottest markets. RealtyTrac says that even though the 5.5 percent of flipped homes was "below" the peak in 2005, it says that 11 percent of today's markets are "above" those levels. That's 12 of the 110 metro areas studied by RealtyTrac.
Among the hottest markets are Pittsburgh, Pennsylvania at 19 percent above 2005 levels; Memphis, Tennessee at 18 percent; Buffalo, New York at 12 percent; San Diego, California, Seattle, Washington and Birmingham, Alabama at 4 percent; and Cleveland, Ohio at 3 percent.
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