Property flipping—defined as the resale of a property within one year of purchase—has become a subject of intense scrutiny in British Columbia's real estate market. Between 2019 and 2021, 2.8% of all residential properties sold in the province qualified as flipped properties. This number, while seemingly small, represents a significant portion of market activity in high-demand areas.

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Key Demographic Data on Flippers

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1. Age of Flippers

Flippers are older than the typical homebuyer. The median age of property flippers is 47 years, compared to 43 years for other buyers. This suggests that flippers tend to have more real estate experience, accumulated wealth, or risk tolerance compared to younger buyers.

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2. Gender Distribution

Flipping is slightly male-dominated:

• 52.3% of flippers are men.
• By contrast, men make up 49.9% of all individual homebuyers in B.C.

This difference may be explained by historical trends in investment activity and risk-taking behavior, often skewed toward male participants.

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3. Immigrant Participation

Immigrants are significantly overrepresented in the property flipping market:

• Immigrants accounted for 45% of all property flippers in 2020, despite comprising 36.3% of all individual buyers.
• This indicates a higher propensity for real estate investment among immigrant populations, particularly in urban areas with strong market performance.

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4. Income Levels

Interestingly, flippers tend to have lower family incomes compared to other homebuyers:

• Median family income for flippers: $115,000
• Median family income for non-flippers: $125,000

This disparity may reflect the use of leveraged financing or pooled investments to enter the flipping market. It also suggests that flipping isn’t exclusive to high-net-worth individuals but is accessible to middle-income earners seeking higher returns.

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5. Business Involvement

Corporate entities play a notable role in the flipping market:

• Businesses accounted for 7.9% of flipped properties from 2019 to 2021, compared to just 2.6% of all real estate transactions.
• Business-driven flipping may focus on multi-unit residential properties or high-yield investments, adding a commercial dynamic to what is traditionally considered an individual investor market.

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Geographic Concentrations of Flipping

Urban Versus Rural Flipping

Flipping rates are significantly higher in urban areas compared to rural regions. For instance:

• Vancouver CMA: 3.2% of sales were flipped in 2021.
• Kelowna CMA: 3.4%, indicating a strong market driven by rising prices and demand.
• Victoria CMA: 3.3%, closely following provincial urban averages.
• Abbotsford-Mission CMA: 6.5%, the highest in the province, reflecting a volatile market with high speculative activity.
• Rural Areas: Flipping activity was lower, at 2.5%, in less densely populated regions.

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Property Types and Flipping

Condominium apartments dominate flipping activity:

• 4.0% of condos sold in 2021 were flipped, compared to 2.8% of single-detached homes.
• Multi-unit residential properties, such as duplexes, saw a flipping rate of 3.4%, reflecting investor interest in rental-focused real estate.

Condos’ higher flipping rates correlate with their lower purchase prices and shorter renovation timelines, making them an attractive option for speculative investments.

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Economic Implications of Flipping

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Price Dynamics

Flipped properties often enter the market at elevated prices, contributing to rising housing costs:

• In 2020, the median purchase price for flipped properties in B.C. was $565,000, compared to $610,000 for non-flipped properties.
• Despite lower initial prices, flipped properties achieved a median price gain of $115,000 in 2021, a 20.3% gross profit.

These gains were even higher for single-detached homes, with a 23.9% median price gain, compared to 16.3% for flipped condominiums.

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Housing Supply Constraints

Flipping reduces housing availability for long-term buyers and renters. With flippers focusing on short-term profits, homes that could serve as stable housing are instead cycled through the market for speculative purposes. This impacts affordability, particularly in high-demand areas like Vancouver and Kelowna.

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What Does This Mean for Policymakers?

New Tax Measures

In response to flipping's impact on affordability, the federal and provincial governments have introduced new tax measures:

• Federal Tax: As of January 1, 2023, profits from properties flipped within a year are fully taxable as business income.
• B.C. Home Flipping Tax: Effective January 1, 2025, this tax applies a 20% rate on profits for properties sold within one year, with a declining rate for sales within two years.

These measures aim to curb speculative flipping, but their long-term impact on affordability and investor behavior remains to be seen.

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Need for Broader Solutions

Experts agree that flipping is a small piece of a much larger housing puzzle. To address the root causes of housing affordability issues, policymakers must:

• Increase housing supply through zoning reforms and expedited construction approvals.
• Invest in affordable, non-market housing to reduce speculative pressure.
• Monitor corporate involvement in flipping, as businesses may drive price surges in targeted areas.

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Conclusion

The demographics of property flippers in British Columbia reveal a complex market driven by middle-aged, middle-income individuals, immigrant investors, and businesses. While flipping represents only a small fraction of real estate transactions, its impact on prices and housing availability cannot be ignored.

For buyers, sellers, and investors navigating this dynamic market, Coldwell Banker Horizon Realty offers expert advice and local insights to help you achieve your real estate goals.