In case you need any more signs the housing market is getting back on track, the Los Angeles Times reported this week an increasing number of high-end homes are being “flipped” for lucrative profits.
The numbers in the article are staggering. For example, a mansion in Beverly Crest owned by Rihanna was purchased for $4.5 million last year and, following a modest upgrade, is back on the market with a price tag nearly double—$9.95 million.
Flipping homes—which is defined as a home being bought and resold within six months—is up 25 percent from a year ago across the nation, according to the Times. It’s been particularly trending in the luxury market. The reason is simple. Flippers in the luxury real estate market are currently seeing returns on investment of more than 20 percent, one real estate analyst told the Times.
Leading the spike in profits is a shrinking supply of high-end homes and purchase terms that are agreeable even on a historic level.
“There’s a sentiment now that you don’t really want to miss the boat,” UCLA professor Paul Habibi told the Times.
Those looking to get in on the action probably need to act fast. To give you an idea of the supply shortage, the Times pointed out there are generally enough unsold homes to fill up to seven months of transactions. Right now there is only a 5.7 month supply of homes selling for a million dollars and up, a sharp downturn from last year when there was a 10.7 month supply.
Locales drawing attention from high-end flippers include Hollywood Hills, particularly the Birds Street area; West Hollywood, Beverly Hills and Venice.