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Are Flips Pushing Prices?
Back in 2013, I noticed an increase in the number of flips (homes that are bought by investors, upgraded, and re-sold with the aim to make a profit) being sold in Brampton. At the time, I was worried that flips were starting to influence prices too strongly.
This trend became more noticeable in 2014, but in 2015 it really took off . For example, the number of flips in the south-east of Brampton more than doubled in 2015!
Here are some surprising numbers for the area bordered by Queen St., Steeles Ave., Highway 410, and Torbram (in other words, the A–F sections of Bramalea).
- In 2013, out of 220 homes sold, there were 10 flips, with an average price increase of $85,800.00.
- In 2014, out of 224 homes sold, there were 16 flips, with an average price increase of $88,300.00.
- In 2015, out of 248 homes sold, there were 34 flips (14% of all sales!), and the average price increase was a staggering $110,400.00.
Keep in mind that the selling price of a flip includes more than just the value of the renovations—it also includes the carrying costs and profit for the investor, usually $25,000 or more. In other words: flips are over-priced.
When a flip is used as a comparable to set the price of another home, the result is that the whole neighborhood slowly becomes over-priced. This is happening all across the market, and it has to correct itself eventually.
Want to know more about buying a flip? Just ask me, I'll be happy to help.