Monday, August 07, 2006

Condo Flipping in DC

When discussing the condo market in DC, a key assumption is that much of the market's zeal has been driven by buyers who flipped their condos soon after - if not before - the closing date.

However, my analysis of DC 2006 sales data (January - June) could find only 20 instances - out of 2032 condo sales in 2006 - where a condo was resold, or flipped, soon after it had been purchased. In these 20 instances, flippers paid an average price of $379,581 for a condo and flipped it in 81.6 days for $442,058, netting an average nominal profit of $62,476.

The analysis was restricted to those units that had first closed in 2006 and had then been resold; units that had closed in 2005 and resold in 2006 were not included in this analysis, that will be the next step in the process.

While all but two owners made a nominal profit, it's hard to determine anyone achieved a real profit once carrying costs, transaction fees, and the time value of money are taken into account. For example, the owner of 4101 Albemarle St NW Unit: 635 made a nominal profit of $61,126, but the resale closed 160 days after the original purchase. A 6% real estate agent commission on the flip would cost $39,594, leaving approximately $21,500 to recover five months of carrying costs and, hopefully, with some remaining for a real profit.

Condos Flipped in DC in 2006

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