Home rehabilitators are adding units to the market at a rate rivaling new home builders, according to real estate investment marketplace New Western.
In the 42 markets New Western operates, there were 185,272 new builds in 2023 compared to 163,894 home flips. The company noted that flipping vacant or uninhabitable flipped homes contributes new inventory just as new construction does, but rehabilitated homes are 21% below the average sales price.
According to a New Western report, 91% of investors surveyed expect their businesses to grow, and 80% plan to flip one to five homes during 2024. Additionally, 19% of female investors anticipate 50% growth, compared to 13% of male investors. During 2023, 68,000 new investors looking for properties to renovate joined to the New Western marketplace, most operating within 30 miles of their home.
The report on local market data and investor sentiment is based on a survey of 1,300 independent investors focusing on single-family homes in the United States.
Home flipping surpassed new construction in some markets in 2023. Boston had 4,347 flipped homes sold versus 3,166 new homes sold by builders, and flip prices were 7.8% below median sales price. Indianapolis had 4,700 flips sold versus 4,074 new builds sold, and flip prices were 6% below the median.
“We’re helping Americans achieve financial freedom and address the housing and affordability crisis,” said Kurt Carlton, president and co-founder of New Western. “This ‘Great Renovation’ shows that builders and the government alone can’t fix our housing infrastructure issues. … With a shortfall of 4.5 million homes and millions of vacant and aging homes ready for renovation, these investors are just getting started in meeting community needs.”
Most female investors were in business for less than three years while most men reported over three years of experience. The men usually allocate between $50,000 and $200,000 to their rehab budgets, while the women often spend less. But female investors achieve higher sales prices and quicker sales, according to New Western.
