AUSTIN REAL ESTATE: DID “HOUSE FLIPPING” DRIVE UP HOME PRICES?
published on May 23, 2008
“Flipping” – the process of buying Austin homes, renovating them and then putting them back on the market a few years or even months later – has been a fairly common practice in some parts of the Austin real estate market. But has it contributed to a sharp spike in prices?
Consider Hyde Park, one of the oldest sections of the city. Back in the late 1990s when real estate in Austin was all the rage, these tiny 1930s and 40s bungalows in the heart of central Austin became very popular, as news spread nationwide of our town being one of the “hottest” places to live in America. Suddenly homeowners were remodeling, expanding and listing with Austin area realtors, and some even bought properties just to knock down and put up new ones to sell at a premium.
Some examples: in March of 1999 a home on Avenue H (the owner had been living there since 1947) sold for almost $137,000. Thirteen months later it sold again, for $199,000.
In July of 1998 a home on Speedway closed at $174,000. That October after some upgrading it was hurried to market and got $190,000. Less than three years later it fetched $270,000.
There are even more dramatic cases. There’s the home on Avenue A that sold in December of 2000 for $218,000. After a total renovation a buyer in 2005 paid $385,000. Or a similar story on Avenue C, where what sold for $152,000 at the end of 1999 was demolished and turned into a $392,000 sale four years later – a nearly 160 percent jump.
In the five years between 1995 and 2000 the average sales price of a Hyde Park property was $169,400. But how about the last five years? Would you believe $316,300?
The numbers also suggest all those conversions made Austin homes bigger: where the median square footage of these original structures peaked around 1,000 square feet through the late 1990s, it’s about 250 square feet larger today. More rooms, too: the traditional house here was only two bedrooms and one bathroom; now the average configuration is three beds, two baths.
Granted, it’s only one part of town…but now it’s an expensive one.
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