The increased housing demand in Portland has spurred home flipping to rise at a large rate with major profits. One such example is a house that sits just off of Southeast Hawthorne and 48th Avenue, where a two story bungalow needed a little bit of work. The bungalow sold for $350,000 in February of 2014, and with a full remodel which featured a new kitchen, better plumbing, new windows and paint, it sold for $675,000 less than a year later on the market, almost doubling its original selling price!
The purchase of the original house, and remodel venture to be sold at a higher price is what is commonly referred to as a “flip”. Where investors buy a house low, remodel it with some additional features to spruce up the true potential of the house, and then sell it for a larger point to make profit. One area where flipping is becoming very popular is the Portland Richmond neighborhood, where house flipping is becoming a regular occurrence.
In the last year alone, roughly ten homes were flipped in the neighborhood, with an average earnings gain for each house being around $260,000. At profits like that, it’s easy to see why house flipping is becoming an interesting prospect for potential investors.
The neighborhood happens to be one of the more premium areas to live. Portland’s increased housing demand has spurred this new flipping sensation, to increase the potential supply that is so desperately needed in the region. The new house flipping extravaganza has created record numbers, but the trend does have both positive and negative consequences…
Some of the current residents in the neighborhood are becoming disgruntled at the fact that the area they cherish so much, is now just another investment opportunity. In 2015, roughly 1,198 homes went through a flip in Portland, which happened to be the highest number since 2006, before the recession. Investors notably gained more from house flipping than ever before as well, according to Redfin, with an average increase in sale price of roughly $121,044. Even though a house is making record gains, it doesn’t mean that the $121,044 is completely profits. Flipping a house is an expensive endeavor, as most of the new features that go into a proper house flip require extensive labor, new equipment, along with fees and taxation. Often times, reports are made that investors can make large amounts of money flipping houses, but there is no guarantee that investors can make a large profit.
The housing market is one of the most volatile in the nation, as seen in the 2008 recession. One of the positives associated with the new flipping sensation in the Portland Richmond neighborhood is that the increased flipping development helps raise current home values and property within the neighborhood.
Some of the critics associated with the new house flipping trend say that the endeavor is removing some of the affordable housing that is deeply needed in Portland. Bishop Holt, a chairman of the Oversight Committees for the Housing Strategies in the North/Northeast stated in a recent report, he feels that first time buyers are now competing with individuals who have deep pockets and are making it harder for the average person to compete.
With the increased demand for housing, and limited supply available, regional experts believe that the house flipping trend will continue to grow and expand into other territories in the Portland region.