House flipping comes to Philadelphia

Houses including this one, 1234 N. Mascher St., are being bought and sold quickly, particularly in hip, desirable neighborhoods such as Northern Liberties, Fishtown, and Passyunk Square. APRIL SAUL / Staff Photographer
Houses including this one, 1234 N. Mascher St., are being bought and sold quickly, particularly in hip, desirable neighborhoods such as Northern Liberties, Fishtown, and Passyunk Square. APRIL SAUL / Staff Photographer
Posted: July 31, 2013

During the red-hot real estate boom of a few years back, flipping was big sport in many parts of the country but not particularly popular in the Philadelphia region.

Times change, bubbles burst, and the game of buying and selling adjusts accordingly. These days, with the market improving and prices at pre-boom levels or less, flipping single-family homes is becoming more common in those city neighborhoods and area towns where investors see the opportunity to make quick money.

Hip, desirable neighborhoods such as Northern Liberties, Fishtown, and Passyunk Square have become targets for flipping.

"[The] sweet spot seems to be in the $250,000 to $400,000 range," said broker Chris Somers of Re/Max Access in Northern Liberties. He had a settlement Thursday for a client who flipped a house in Passyunk Square, and "we got it sold in one day," he said.

"I flipped one earlier this year in Fishtown and also sold it in a day," Somers said. Those sale prices fell into the $325,000 to $375,000 range.

Somers attributed "flippers coming out of the woodwork" to the pickup in the housing market, adding that increased competition for properties makes it more difficult to find one to buy.

Northeast Philadelphia had seen flippers before, especially during the last decade's boom - largely Asian investors from New York City buying properties in neighborhoods there to fix up and rent.

Flippers are back in Mayfair, Realtor Christopher J. Artur said, and "are willing to pay a premium for having a house with everything new in it."

"This means they will pay 5 percent to 10 percent" above list price to secure the property," Artur said.

But Carol McCann of Re/Max Millennium in Somerton said the Northeast "does not have as many flips as, say, Port Richmond, Northern Liberties, and Fishtown."

"I'm finding in most instances in the Northeast that investors are buying properties to rent them out," McCann said, though "there are instances where motivated sellers will sell for a price that enables investors to flip for a decent profit."

Most investors she deals with want to buy at "no more than 45 to 60 percent of repaired value," she said.

In Center City's neighborhoods, Mark Wade of Prudential Fox & Roach said he was seeing demand for flippable properties, but the supply is low.

"The professionals are really taking over, meaning that when a parcel comes available, we are seeing the 'cash, no contingency' buyers come to the table," Wade said. "First-time flippers are having a hard time competing."

During the housing boom, the number of single-family houses acquired and sold within six to 12 months never accounted for more than a few dozen among thousands of transactions each quarter, said Kevin Gillen, senior consultant at the University of Pennsylvania's Fels Institute of Government. So perhaps it's no surprise that the eight-county Philadelphia region did not appear among RealtyTrac's top 15 markets for profitable home-flipping for the first half of 2013.

(Condos flipped fairly often during the housing boom, Gillen noted. "A number of investors were left holding the bag when the market turned," he said, but the rise in the rental market allowed many owners to rent these units out, and Philadelphia escaped the "ghost towers" phenomenon seen in Miami and Las Vegas.)

In New Jersey, when the boom started to go bust, "all kinds of 'regular' people were jumping in and buying properties and flipping them - or at least trying to," said David Marcantuno of Century 21 Alliance in Burlington County.

"Those kinds of flippers faded away with the drop in values; the investors remained to an extent, but I think they started renting out many of their properties as the rent prices went up," Marcantuno said.

Now that sale prices are rising, "there are some more flips going back up for sale, and I've toured quite a few recent flips with prospective buyers, but I wouldn't say it's really big again," he said.

The same seems true for the Pennsylvania suburbs.

Kit Anstey, an agent for Prudential Fox & Roach in the West Chester area, said he had seen "no more than a dozen since the first of the year."

Cheryl Miller of Long & Foster's Blue Bell office said she imagines flipping will begin again "with inventory and opportunity."

The courts are letting the banks clear out inventories of foreclosed properties, Miller said, citing a listing in Upper Dublin for "$425,000 in a $550,000 neighborhood."


Contact Alan J. Heavens at 215-854-2472, aheavens@phillynews.com or @alheavens at Twitter.

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