House flipping – the art of purchasing a property, then renovating it to sell for profit – has captured hearts and minds in the last decade. Hit TV shows such as Flip or Flop, Flipping Out and Flipping Vegas inspired a generation of new real estate investors revealing an accessible way to make a quick buck.
But what goes up must come down, and the recent house flipping boom was facilitated the 2008 housing bubble burst, which flooded the American market with unsold properties. A decade on, the tide started to turn when profits fell two percentage points in 2019 to an eight-year low. Now, the coronavirus pandemic throws fresh challenges into the mix.
So, what could this sector look like in the coming months and years? Here are a few possibilities.
Scenario 1: The rise of ‘flip to keep’ investments
House prices could fall sharply in mid-2020 and then recover rapidly as part of a ‘V-shaped rebound’, one of the market scenarios set out Realtor.com. This could spell huge opportunities for investors – but they’ll need to wait longer to cash the rewards. Renovations may be followed a period of ‘flip to keep’, whereinvestors use or rent properties prior to selling.
The quality of renovations may be driven upward as a result, since houses will need certain ‘liveable’ add-ons, such as the satellite dishes that come with a phone and internet bundle, charge points for electric toothbrushes and lights in