Rising House Prices Encouraging for House Flippers in the D.C. Area

The housing market in Washington D.C. is the strongest it has been in years. According to a recent report from the Commerce Department, the robust market is likely to continue for the months to come. Daren Bloomquist, vice president of RealtyTrac, implied that the strong market is a great benefiting house flippers throughout the region.

“D.C. is one of those markets that’s still pretty on fire and that is an advantage to flippers,” Bloomquist said.

State of House Flipping in D.C.

House flipping wasn’t common in the D.C. area until a few drawing-of-three-houses-where-it-reads-buy-renovate-resellyears ago. “It seems like house flipping came late to Washington, D.C. It started in Phoenix and in some areas of California first, because prices hit bottom first in those areas. In D.C. there’s been this window of opportunity between low-priced housing stock and really high price appreciation over the past two years,” Nela Richardson, the chief economist at Redfin told WAMU.

However, the booming house market has made the practice much more appealing to investors in the D.C. region. A growing number of investors are making returns over 50% after purchasing and repairing existing houses. RealtyTrac estimates that the average house flipper makes a $107,000 profit from their homes.

Of course, a number of factors play a role in the profitability of house flipping. The zip code the home is located is one of the most influential factors. The most valuable houses that have been flipped are located in the 20743 zip code, which includes parts of Maryland.

Will House Flipping Become More Common in D.C.?

The sudden popularity of house flipping in Washington D.C. is due primarily to the rapidly growing housing market. The National Association of Realtors found that the region is home to one of the fastest growing housing markets in the country. There are a number of factors that appear to be playing a role, but one of them is the growing tech sector. The housing market is likely to grow more quickly as many businesses relocate from Silicon Valley to escape costly regulations and taxes.

If the economy maintains its current growth rate, it will continue to propel the D.C. housing market. A growing number of house flippers are expected to invest in properties as they speculate housing prices will continue to rise. In turn, their acquisitions will lift housing prices even further, which may encourage more sellers to list their properties.

Did You Know?

We all like to think that we are experts in the field of remodeling and knowing how to select and choose the best person to do work on our homes.

I’ll tell you something very funny before I start this series to help educate you on what you think you know.  Hopefully after reading through the series, you will then begin to think more and research more about the person or company that you would allow to work in your home, but you won’t let drive your car.

Question 1.  Is the person that you allow in your home a Contractor or a Tradesman and why does it matter?

There are differences.  A Tradesman has a specific license that is granted to an individual that can prove that he has mastered a technical skill or has applied for a skill that does not require a mastery but is specific to a particular job.

What are skilled Master trades that require a test to get a license?

  • Plumbers
  • Electricians
  • HVAC (AC)

These trades require years of training and an acute knowledge of the craft.  Up to 7 years of the training is done under the supervision of a Master Tradesman, a person that passed the technical testing.  The reason for the long training (called journeymen training) is to expose the student to every possible scenario in the field that may not be tested in the books. This builds a working knowledge and problem solving skills of the trade that they are pursuing.

On the other hand there are other less technical trade licenses that don’t require such training.  It does require knowledge through taking a test, but it’s not as grueling.  These trades are:

  • Window & Siding
  • Painters
  • Drywall
  • Tile
  • Roofing
  • Concrete
  • Carpentry (framing, trim, fence)

There are very few people licensed in the state of Maryland, DC or Virginia with a license in more than one technical trade or in the non-technical trades. If someone comes to you and say they do plumbing and electrical, they are most likely not telling you the truth.  It is rare.  On the other hand, a company can have the multiple trades under their license.  This is how.  They can have one person in the company that has the master license and from that one license they utilize the trade.  But you have to check because more often than not, the person with the skill never works in the field.  Most likely, you are getting the journeyman to do the work and the master only checks it for code accuracy.

What is a Contractor License?  

This is a unique license that has no technical training or a need to know how to do any work.  This license was created to govern the tradesmen.  The Contractor License is about law, coverage and responsibility. There are very few Contractors because the requirement are extremely difficult.  Bonding is high, job knowledge is high, penalties for breaking the rules are high, insurance is high.

The reason the Contractor License was formed was to manage the tradesmen. When we pair with a Tradesman, we are jointly called Contractors and Subcontractors (tradesmen).  These totally distinct licenses were created to prevent Tradesmen from working directly for customers on projects consisting of more than one trade requirement.

So when you let someone work on your house that says he can do all of the trades, most likely you are dealing with someone who is not licensed, or only has a single license and is working across trades.  In either case, you as a homeowner are not protected by the state licensing commission in the following states, if they do damage to your home:

  • Washington DC – DCRA  (Department of Regulatory Affairs)
  • Maryland – MHIC (Maryland Home Improvement Commission)
  • Virginia  – Department of Professional and Occupational Regulations)

Again, most of you let people work on your home before you let them drive your cars.

Michael Wiggs

President/CEO

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