IRVINE, CA-Las Vegas is one of the country’s best housing markets for flipping homes to sell to hipster buyers, according to Irvine-based RealtyTrac. Several factors, including demographics and the hard-hit foreclosure scene here make the market ideal for this type of venture.
Hipsters have been accused of holding back a more robust housing recovery because of their low homeownership rates and lackluster household formation, says RealtyTrac. The US Census Bureau—which defines hipsters as those aged 25 to 34—reports that only 41% of this demographic were homeowners in 2012. This is well off the average hipster homeownership rate of 46% from 1982 to present, and it’s below the high of more than 49% in 2004.
The hipster homeownership rate has been below the long-term average since 2009, and the deficit in hipster homeowners because of that below-average period stands at approximately two million, according to RealtyTrac. So why are hipsters not becoming homeowners? In part, it’s because many are living with their parents longer rather than forming their own households, according to analyses of Census Bureau data by PewResearchCenter focusing on Millennials, a demographic heavy with hipsters.
But some markets, like Las Vegas, are ideal for selling flipped homes to this demographic. “The overcorrection of the Las Vegas housing market and the ability to find a lightly distressed property are a couple of the main factors that make flipping home in Las Vegas profitable,” says Gordon Miles, president, COO of Prudential Americana Group, which covers the Las Vegas market. “Las Vegas zip codes 89169 and 89119 are older zip codes that were hit hard during the foreclosure crisis, offering buyers great opportunities to flip in this area. Add in the close proximity to the Las Vegas Strip and UNLV, and it becomes a prime area for flipping to the hipster demographic.”
Miles adds that the community surrounding the university has “all started to change with the addition of new restaurants and hip shops, and we’re noticing the areas that were once old are becoming new again. Another great side to flipping in these zip codes is Las Vegas is experiencing excellent rental returns, so if you buy a property, flip it and end up holding on to it as a rental property, you’ll still see profit.”
Washington, DC, is another market where home-flipping has been successful, says Charlie Bengel, Jr., CEO of RE/MAX Allegiance, which covers the Virginia, Maryland and DC areas. “We continue to see low housing inventory in the DC metropolitan area, making homes that have been flipped more attractive to potential homebuyers. By purchasing a flipped home, they are able to get into a home that feels new while still being in an established neighborhood.”
Ultimately, according to RealtyTrac, a successful hipster flipping strategy ends with the bottom-line profit potential in each market. US single-family homes flipped in 2013 provided an average gross profit of more than $58,000, up from $45,000 in 2012, according to RealtyTrac’s 2013 year-end flipping report.