House flipping has become a tool that real estate investors have used over the past few years. House flipping occurs when a real estate investor buys a house and then sells them to a buyer for a profit. When this happens an investor has bought a property that has the potential to increase in value with the correct repairs. When a house is being considered to be “flipped” the home has to be purchased with the intention of it being resold pretty quickly.
Flipping houses is not just confined to a modern new house, and can even include condos, cabins, ranch-style homes, condominiums, and even bungalows. In 2020 alone 57,155 single-family homes and condominiums in the United States were flipped in the third quarter of that year. In the third quarter of 2019, home flippers averaged a 40.6% ROI (return on investment) or a gross profit of $64,900 per flip. Even with these successes, it would help to see how house flipping was impacted by COVID-19, as this virus has disrupted many industries in the United States, including the real estate market.
Inventory Reduction
One of the first impacts of COVID on house flipping is that an inventory reduction has occurred. When COVID-related lockdowns first took place sellers began to assume that buyers wouldn’t be in the market for new homes. People were being advised to stay where they were, which meant that packing for a major move to a new house wasn’t in the cards. Secondly, the economy took a huge hit, preventing people from making huge investment plans, such as purchasing a new home.
In other cases, sellers didn’t want to host open homes with the possibility of having the virus spread by potential buyers. This has all combined to create a reduction in the inventory of homes that were available to be flipped. The good thing about this for some home flippers is that there is less competition. This could allow home flippers, who take the proper COVID-19 precautions, to continue to flip homes in a market where competition is non-existent, allowing a flipper to reach more potential buyers. Say for those house flippers who already had plans to perform a Knoxville, TN bathroom remodeling for a newly flipped home when COVID hit, they can move forward with those plans in the hopes of finding potential buyers.
Fortunately, this inventory reduction will be temporary, and there’s a good chance that an influx of properties will be available to home flippers in the future. In some cases, unfortunately, such inventory might come available due to the host of foreclosures that might occur due to the economic strains that homeowners are currently experiencing. Whatever the outcome, inventory reduction is just one way that house flipping has been affected by COVID in the best way possible.
Construction Continued
As COVID continued to spread throughout the United States, the construction industry was seen as being an essential business. This meant that construction-related tasks continued unaffected by the many shutdowns which other businesses experienced. Construction workers and contractors then continued to work steadily on flipped homes through March. This allowed flippers to continue flipping new homes and staging an open house for potential buyers.
For people who suffered job losses in other industries, this has opened them up to seek job opportunities on different fronts. This has included construction and has become a financial boon for home flippers. For those flippers seeking construction opportunities to have such work done as building a living room in a house, installing new plumbing, installing a new bathroom, and installing sink additions to a home, increased numbers of contractors and construction workers is good news. As more contractors and construction workers become available, this can lead to a faster turnaround for flipping a home.
Increased Demand
During the COVID pandemic, enforced and suggested lockdowns have become a constant staple in today’s world. In cases like these, it’s been asked that people stay home in the hopes of preventing the spread of the virus. This has created circumstances where family members have been asked to spend a considerable amount of time together. In some cases, this has turned out to be a good thing. Families have grown closer, creating deeper familial bonds that weren’t there before. Family members are enjoying nights spent together around the tv, playing a board game, or getting together to find the best digital photo storage options to keep those family photos of new memories saved.
In other cases, this isn’t the case. Some people are getting tired of their respective loved ones, and need some space. Sometimes it’s a good idea to just take a break from your loved ones. When you live in smaller homes or apartments, you often don’t have that luxury. This has led to an increase in apartment dwellers seeking out larger homes. This has spelled a boon for home flippers. Finding more room in a new house is a great way to give people the needed space that is necessary to have some peace of mind. More space is a good option for those families who have a need for more personal space.
In addition to this, many people are realizing during COVID times it’s not necessarily a good option to just stay in urban areas. With the switch in working remotely from homes, it’s becoming a really good idea to not utilize offices as much as before. This saves on costs for the company and ensures that their workers will stay healthy. For the workers though, this means that they don’t necessarily have to live extremely close to their office. Some people might see working from home as a drawback, but at the end of the day numerous costs are being saved, and the workers are staying safe. These workers can then afford to live in a newly flipped home which is further away, now that they are working from home.
