By Tracy Royce
Will flipping houses still be popular in Arizona in 2023? With the Federal Reserve trying to get a handle on inflation, talks of a looming recession, and sales being significantly lower, it may be easy to think the days of fix and flipping in the Phoenix market are no longer en vogue.
However, the local data tells a different story. Not only that, but many speculators who got into flipping did so without proper training, ignored the fundamentals, and were able to ride the wave of an ever-increasing market until the music suddenly stopped.
So, does flipping only work in a Seller’s market? The better question to ask is since the market has shifted, do you think Buyers are less picky to find well-renovated, well-priced, and move-in ready homes?
The answer is, “Well, of course not!” Buyers are actually pickier about finding a home that suits their needs, and especially their budget. Since we have been seeing more of a price correction than radical price drops from previous years, serious buyers are warming to the idea that the market isn’t going to “crash.” They’re also settling into the idea of a 6% mortgage now that the shock has worn off. However, since there hasn’t been a flood of inventory, prices haven’t adjusted to offset the difference in monthly mortgage payments. To combat the affordability challenge, savvy agents and mortgage originators are advising sellers to offer incentives, like rate buy downs, concessions, and even seller carry options. Putting all this together, we’re starting to see demand tick up once again.
The advantage rehabbers will have in the market now is less competition and more opportunities, but they’ll also have to balance their renovation budget, holding costs, and resale pricing more closely.
In a more balanced or Buyer’s market, the saying is “Easy to buy, harder to sell,” whereas, in a Seller’s market it had been “Hard to buy, easy to sell.” With that in mind, rehabbers will need to follow a system to get their projects to market, buyers excited, and their properties sold in a timely manner.
Lastly, although the last few years have kept us on our toes, the members of AZREIA have access to monthly data and meetups to help guide them as to what is happening and likely to happen in the coming months. For flippers, this is an asset many rehabbers in other parts of the country don’t have.
If you’d had an interest in Fix and Flipping, but are in the exploration or educational phase, the timing couldn’t be better to come to join us for Fix and Flip February. We’re going to spotlight our educator, Tracy Royce, a rehabber, and offer you an introduction to her Fix and Flip methods during our monthly meeting, a Home Depot-sponsored bus tour to get you out on projects and learn on-site, as well as more in-depth training with Tracy through a deep dive session and also her Flip School, AZREIA’s first flipping course offering.
Fix and Flipping is an opportunity to generate chunks of cash, which can set you on the path to financial freedom, but we are no longer in a market that will forgive any and all mistakes. If you want to approach flipping with a system, confidence, training, and real-world knowledge, join us for Fix and Flip February to build the foundation for your flipping success.