Aging housing stock in Dallas creates target-rich environment for flippers – Dallas Business Journal – Dallas Business Journal






Editor’s note: This is part of a Dallas Business Journal project examining the aging housing stock in North Texas and the implications for economic development. To read more articles in the series, click here.
With a red-hot housing market, home flipping is surging in Dallas-Fort Worth, and the aging housing stock is a big reason for the wave.
Due in large part to the age of homes, especially in core neighborhoods of Dallas and Fort Worth, North Texas is one of the largest markets in the country for flipping distressed properties, said Josh Stech, co-founder and CEO of Sundae, a real estate marketplace that connects sellers of dated or damaged homes with cash buyers who are typically investors looking to flip the property.
“Dallas is a very, very large market for this business,” Stech said. “The age of the housing stock is one of the things that is most correlated with the percentage of homes that are flipped.”
Across the DFW metro area, for the 12-month period ending in August 2021, about 12,200 homes were bought, renovated and either held as a rental or sold, according to data from San Francisco-based Sundae Inc. Roughly 7,400 of those fix-and-flip transactions were in the Dallas-Plano-Irving metro division and about 4,800 were in the Fort Worth-Arlington-Grapevine division, Sundae’s statistics show.
Only the Atlanta area, with about 27,000 homes flipped in the August 2020-August 2021 timeframe, and the Phoenix area, with roughly 17,100 flips in that period, topped the DFW total, according to data provided by Sundae. The next highest metro area after DFW was Tampa Bay, with about 12,000 homes bought, renovated, then rented out or sold.
Looking at other Texas metro areas, Houston had roughly 6,000 houses flipped in the year preceding Aug. 31, San Antonio had about 2,100, and Austin had about 1,900, according to Sundae’s stats.
In percentage terms, flips made up 9.9% of the August 2020-August 2021 housing transactions in the Dallas metro division and 10.5% in the Fort Worth division. Flips made up 8.1% of the total in Austin, 8.3% in Houston and 10% in San Antonio.
For outside-of-the-state comparisons, flips made up 5.8% of the 12-month time period’s housing transactions in Los Angeles, 6% in San Diego, 5.2% in Sacramento and 3.9% in Oakland. They made up 7.1% in Atlanta, 9.1% in Tampa, 7.1% in Jacksonville, 3.3% in Seattle, 9.7% in Phoenix, 6.1% in Denver and 7.8% in Las Vegas.
The average age of the housing stock in the Dallas division is 33 years old, and the average on the Fort Worth side of the metroplex is 35, according to Sundae. 
“The homes on average are definitely older than some of the newer markets like Las Vegas and Phoenix, where house flipping is really big and popular,” Stech said. “It actually looks a little more like Tampa (37-year average age) in that regard, where the homes on average are just older so they need more work.”
The average home age in Las Vegas is 27 and in Phoenix is 31, Sundae’s statistics show.
Checking other Texas metros, the average home age is 27 years in Austin, 32 in Houston and 34 years in San Antonio.
Second-quarter flip sales soar
The DFW area ranked third nationally for second-quarter home flips with 1,980 sales, according to Attom Data Solutions. That’s up by more than 200% from the first quarter of 2021 and marks the most flips in the second quarter since Attom Data began tracking the transactions in 2000.
More than 800 of the second-quarter home flips were in Dallas County, and 463 of the flips were in Tarrant County.
Some 5.9% of DFW’s second-quarter home sales transactions were by flippers, compared with a 4.9% market share nationwide, according to Attom, which defines flips as single-family homes or condominiums that are bought and resold within 12 months.
Top Five for Flipping
Here are the country’s top five home-flip markets in the second quarter, ranked by the number of flips, followed by the percentage that flips made up of the total market sales, according to Attom Data Solutions:
The average gross home-flipping profit in DFW fell about 10% from second-quarter 2020 to $44,000. That compares to a national average of about $67,000 in profit per home in the second quarter, according to Attom’s report, released Sept. 16. 
Nationwide, 79,733 single-family homes and condos in the United States were flipped in the second quarter. Home flips as a portion of all home sales increased from the first quarter of 2021 to the second quarter of 2021 in 144 of the 182 metro areas Attom analyzed.
Advantages of age
Soaring home prices and a shortage of inventory help flippers profit when it’s time to sell, but those same factors make it harder to acquire homes on the front end.
Flipping older homes is one way to address the severe shortage of affordable, livable houses on the market in DFW and most metros nationwide, Stech said.
“One of the things about older houses that make them good investment opportunities is that, obviously, they become dated over time, and so stylistically, they don’t match the preferences of new homebuyers like newer homes or actually brand new homes would, so they need to undergo some aesthetic upgrades,” he said.
Many older homes’ floorplans are choppy and don’t match today’s buyers’ preference for openness, so that provides an opportunity for flippers to add value by moving walls and making other renovations before a sale, he said. 
“Older homes need more work, which creates more of a value proposition for an investor to get in there to provide something that’s turnkey for the homeowner,” he said.
Older homes are typically built on larger lots, which have become more popular since the onset of COVID because buyers are seeking more space and some want room to add a secondary housing unit such as a granny flat or a backyard cottage, Stech said.
“That’s one of the things that a lot of buyers like in the Dallas market,” he said. “Lots are large enough to drop in an ADU (accessory dwelling unit), so now you’re selling a house that has a rental-producing back portion of it. A lot of your blue-collar, first-time homebuyers or your move-up homebuyers are looking for that ability to create some income while they’re also living in the house.”
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