How flipping and short sales are shaping the Greater Baltimore Housing Market
Two of the biggest trends in the Greater Baltimore housing market today are flipping and short sales. Here’s a closer look at these two growing areas of real estate
Baltimore has been noted recently as a top city to flip houses and the result has been staggering.
We see first-time flippers flooding the market, oftentimes overpaying for flips. People who flip homes well are individuals and companies who are able to be patient and not only buy for the right price, but are sure they have contractors and professionals in place to do the work on the back end.
When it comes to finding the right flip, 33% is making sure you pay the right price, 33% is ensuring the renovation estimates are accurate and the final 33% is identifying the value of the property after the renovations are completed. In our experience, hitting two of the three will usually make for a profitable deal.
When flipping, it’s always important to ensure the work is being done accurately, to code, and with all the necessary permits pulled, for the right price.
When it comes to the city, an influx of flips over the past 18-24 months gives buyers a ton of choices, but they’re not always good choices. Oftentimes, these flips start out at an inflated price only to come down after months of being on the market. First-time flippers can find that they don’t have a network of professionals to tap into and run into roadblocks, which can cause issues in obtaining the correct permits from the county or city in a timely fashion, which ultimately delays the work from being completed quickly. Overall, this has been driving the inventory in the city upwards, and the demand downwards.
In the county, there are even less options for flippers creating a very competitive environment. The main difference here is that demand from buyers is still so high. Buyers are willing to pay top dollar for houses that show well and are priced right, so for someone flipping, finding the right deal in the county can be a big win.
Baltimore short sales
Sitting in a real estate office we see things at a ground level that can indicate the way the local economy is shifting.
Housing dictates so much of the way a community behaves so it is interesting to see how buyers and sellers are operating in a given market. In Baltimore, we have seen a very small uptick in short sale in the past six months. A short sale is different from a foreclosure in that a seller is able to be proactive and negotiate selling their home for less than they owe in order to obtain a release on their mortgage, and sell their property when they otherwise wouldn’t be able to afford to do so.
We see these pop up more and more as people are over-leveraged in their homes. This is generally a sign that people are overly optimistic about the economy (but this optimism can lead to a breakdown). Short sales typically occur when the owners purchase a property when the market is hot (prices are high), but when the market comes back down, the owners are no longer able to sell the property for what they once owed, since their property is no longer valued as high as it was when the market was high.