TIME cities

The Rise of Suburban Poverty in America

Rooftops in suburban development in Colorado Springs, Colorado.
Rooftops in suburban development in Colorado Springs, Colorado. Blend Images/Spaces Images/Getty Images

The suburbs aren't the middle-class haven many imagine them to be as new numbers show 16.5 million suburban Americans are living beneath the poverty line

Colorado Springs is often included on lists of the best places to live in America thanks to its 250 days of sun a year, world-class ski resorts and relatively high home values. But over the last decade, its suburbs have attained a less honorable distinction: they’ve experienced some of the largest increases in suburban poverty rates.

The suburbs surrounding Colorado Springs now have seven Census tracts with 20% or more residents in poverty, according to a report released Thursday by the Brookings Institution. In 2000, it had none. In those neighborhoods, 35% of residents are now considered to be below the poverty line, defined as a family of four making $23,492 or less in 2012.

“We’ve seen this all over the state,” says Kathy Underhill of Hunger Free Colorado, a statewide anti-hunger organization, referring to the growth of suburban poverty. “But I think the American public has been slow to realize this transition from urban poverty to suburban poverty.”

Poverty in the U.S. has worsened in neighborhoods already considered to be poor, but it’s now becoming more prevalent in the nation’s suburbs, according to the Brookings report.

“Poverty has become more regional in scope,” says Elizabeth Kneebone of the Brookings Institution and a co-author of the report. “But at the same time, it’s more concentrated and it’s erased a lot of the progress that we made in the 1990s.”

In the last decade, the number of Census tracts considered “distressed” — in which at least 40% of residents live in poverty — has risen by almost 72%. The number of poor people living in those neighborhoods has grown by an even faster rate—78%—from 3 million to 5.3 million. In 2000, the percentage of poor people who live in economically distressed neighborhoods was 9.1%. Today, it’s 12.2%.

Those areas are leading to what Kneebone calls a “double burden” for impoverished residents—being poor while living in a low-income area that often has failing schools, inadequate healthcare systems and higher crime rates. And as those areas are increasingly located in suburban areas, low-income Americans don’t have the kind of social safety nets often found in urban centers.

The numbers of suburban poor are growing at a more rapid rate than those in urban areas. In 2012, there were 16.5 million Americans living below the poverty line in the suburbs compared with 13.5 million in cities. The number of suburban poor living in distressed neighborhoods grew by 139% since 2000, compared with a 50% jump in cities. Overall, the number of poor living in the suburbs has grown by 65% in the past 14 years—twice as much growth as in urban areas.

It’s easy to pin the growth of concentrated and suburban poverty on the recession, but the spread of poverty throughout the U.S. has broader and more varied explanations. The numbers of suburban poor have been swelled by low-income residents who might once have lived in urban cores, but have been priced out of gentrifying cities, and have moved into affordable housing more prevalent in the suburbs.

Suburban areas also tend to be centered around industries most affected by the economic downturn, like manufacturing and construction, and the jobs that have taken their place are often low-paying, like retail and service positions.

There are also few social programs to help the suburban poor ascend the economic ladder. In the counties surrounding the Denver and Colorado Springs area, for example, many charitable organizations and anti-poverty programs have historically been focused on urban cores and haven’t caught up to changing demographics.

“The charitable infrastructure over the decades have focused on the inner city,” says Underhill of Hunger Free Colorado. “They’ve traditionally not had big case loads and aren’t accustomed to the level of service that’s needed.”

The Brookings report highlights a few suburbs that have seen decreases in poverty, including those around El Paso, Texas; Baton Rouge, La.; and Jackson, Miss. But they were outliers. In North Carolina, three suburban areas—Winston-Salem, Greensboro-High Point, and Charlotte—saw significant increases in both the number of economically distressed neighborhoods and the percentage of poor in those areas. Atlanta now has 197 areas with poverty rates above 20%, up from 32 in 2000.

“Suburban areas are no longer just homes to middle- and upper-income households,” says University of New Hampshire demographer Ken Johnson. “There were always poor suburbs, but much of the outflow of population from urban cores to suburbs has historically been middle- and upper-income. That is less true now.”

Kneebone agrees, saying the perception that suburban areas were some sort of middle-class haven “was always a bit too simplistic.”

“Poverty is touching all kinds of communities,” Kneebone says. “It’s not just over there anymore.”

MONEY The Economy

For the Fed, There’s Only One Excuse Left to Keep Rates Low

Aerial view of housing development
David Zimmerman—Getty Images

The economy and inflation have now risen to levels where the Fed has to start thinking about raising rates. The only excuse left: the weaker-than-expected housing market.

The pressure is mounting on the Federal Reserve to start raising interest rates — and Fed chair Janet Yellen is running out of excuses.

On Wednesday, the Fed announced that it would keep short-term interest rates near zero and would continue to gradually taper its stimulative bond-buying program as the economy improves. No surprise there.

But the chatter for the Fed to stop coddling the economy really heated up Wednesday morning.

That was when a new government report showed that, after hitting a speed bump in the snowy first quarter, the economy really sped up between April and June. Gross domestic product grew at an annual rate of 4.0% in the second quarter.

What’s more, the government went back and revised some of its estimates for prior quarters. Uncle Sam now believes the economy grew well above the normal 3% rate in three out of the past four quarters.

“With this morning’s GDP release,” says James Paulsen, chief investment strategist and economist at Wells Capital Management, the “is-the-Fed-behind-the-curve fears among investors are increasingly evident.”

The GDP report included preliminary measures of inflation that might not sit well with Wall Street’s inflation hawks.

In the second quarter, the so-called personal consumption expenditure index, which is the Fed’s preferred measure of inflation, grew 2.3%. If you strip out volatile food and energy costs, core PCE still rose 2%. UBS economist Maury Harris notes that this represents a big jump from the 1.2% pace of core inflation in the first quarter. Plus, 2% is the target that the Fed has openly set for inflation.

While the actual level of inflation today may not be so worrisome, the ability to fight inflation after the fact is, says Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott. “The challenge with inflation is that there’s a very long lag between policy and price pressures, so a Fed concerned with inflation 12 to 24 months down the road needs to start acting now to protect against the prospect.”

Three years ago, the Fed drew another line in the sand. The Fed back then said that it would not think about raising rates until the national unemployment rate fell to 6.5%. Back then, policy makers thought that this would not transpire until around 2015. However, the unemployment rate fell below this level in April and is threatening to fall below 6%.

US Unemployment Rate Chart

US Unemployment Rate data by YCharts

In recent months, as the Fed has tried to explain why it won’t hike rates soon despite rising inflation and falling unemployment, Yellen introduced a new reason altogether: housing.

In mid July, in a monetary policy report delivered to Congress, Yellen said:

The housing sector has shown little recent progress. While it has recovered notably from its earlier trough, activity in the sector leveled off in the wake of last year’s increase in mortgage rates, and readings this year have, overall, continued to be disappointing.

Later on in the report, Yellen noted that the lack of traction in the housing sector is probably preventing the labor market from reaching its full potential:

Even after rising noticeably in 2012 and the first half of 2013, real residential investment remains 45 percent below its pre-recession peak. The lack of a rapid housing recovery has also affected the labor market: Employment in the construction sector is still more than 1.6 million lower than the average level in 2006.

In announcing its rate decision on Wednesday, the Fed’s Federal Open Market Committee reiterated that while economic growth in general appears to be returning, “the recovery in the housing sector remains slow.”

The irony is that the two things that are likely to get the housing market on track are low mortgage rates and an improving job market.

To achieve the latter, the Fed is keeping rates low. Yet to achieve the former, the Fed needs to show the bond market that it is serious about combatting inflation. And the worst way to do that is keep rates low.

There, in a nutshell, is Janet Yellen’s conundrum.

MONEY home prices

Case-Shiller Index Shows Home Price Growth Slowing

Home prices increased at their slowest pace since February 2013, according to the latest report on the S&P/Case-Shiller Home Price Index.

The index, which compiles a 10- and 20-city composite of home prices, showed the 10-city composite posted price gains of 9.4% year-over-year, while the 20-city group showed gains of 9.3%. Both results were significantly lower than the 10.9% and 10.8% year-over-year increases the respective composites showed last month, and much less than the 9.9% gains analysts expected from the 20-city index.

All 20 cities posted some month-to-month price gains before seasonal adjustment, but 14 of 20 saw prices decline once seasonal factors were taken into account.

This is the second bit of bad news for home-sellers this month. On Monday, the National Association of Realtors reported that pending home sales dropped 1.1% in June, and were down 7.3% since June of 2013. Lawrence Yun, the NAR’s chief economist, blamed tight credit, low inventory, and flat wages for the decline. However, Yun predicted sales would increase slightly in the second half of the year, partially because price appreciation has slowed.

“Housing has been turning in mixed economic numbers in the last few months,” said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. “Prices and sales of existing homes have shown improvement while construction and sales of new homes continue to lag. At the same time, the broader economy and especially employment are showing larger improvements and substantial gains.”

Of the 20 cities measured by the Case-Shiller index, Charlotte was the only area to see its annual growth rate improve. Las Vegas experienced some slowdown in price appreciation, but remained the city with the fastest price growth (16.9% YOY), followed by San Francisco (15.4% YOY). Washington had the lowest year-over-year growth at 5.8%.

TIME Venezuela

Armed Forces Push Residents Out of ‘World’s Tallest Slum’

As part of a governmental initiative, squatters are being removed from their residences by armed forces.

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On Tuesday, Venezuelan armed forces began the process of forcing out residents at the Tower of David, the nation’s tallest slum, the government’s “Great Housing Mission.”

The 45-story building, originally built to be a high-rise bank, was never completed and abandoned, then taken over by people in need of shelter.

Prior to the start of the evacuation, the slum acted as home to over 3,000 squatters, many of whom have resisted their removal. The building is also home to businesses including a beauty salon, multiple bodegas, and an unlicensed dentist.

TIME housing

4 Charts That Will Totally Ruin Your Saturday

Housing development under construction on farmland, aerial view.
Housing development under construction on farmland, aerial view. Ryan McVay—Getty Images

If you’re waiting to sell your house because you think prices will continue to rise, don’t

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This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published atFortune.com.

The housing recovery that began in 2012 came on almost as quickly and forcefully as the real estate crash that preceded it.

The combination of low interest rates, investor interest, and good, old-fashioned confidence conspired to cause a rapid and vigorous turnaround in home prices after years of tumbling or stagnant home values. But a number of key metrics suggest that the party is over, and any future home price appreciation will be slow and steady from here on out. Here are four charts showing why the housing recovery has ended:

1. Price-to-rent ratios are near their long-term average. Price-to-rent ratios are an important housing indicator that can tell you whether the housing market is overvalued. During the housing bubble, this metric skyrocketed, as speculative fever led people to believe that housing prices would always rise. But the fact that rent rates didn’t rise with purchase prices should have been a warning that the underlying demand for shelter hadn’t increased as much as the demand for owning property as an asset. As you can see, price-to-rent ratios have snuck up above their historical averages, meaning that home values are already a little pricey relative to rents in many markets.

Screen Shot 2014-07-18 at 11.51.55 AM

2. Homeownership rates are also near their long-term average.In the decades leading up to the housing bubble, politicians pushed policies that would increase the homeownership rate. The theory was that homeownership gave people a vested interest in the economy and in their neighborhoods, and that would lead to greater prosperity. But giving out credit to those who didn’t have the wherewithal to afford a home was one factor that led to the failure of the subprime mortgage market. It’s likely, now that policy makers are more aware of the dangers of pushing homeownership, that those rates will remain in the 64% or 65% historical average.

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For the rest of the story, go to Fortune.com.

MONEY The Economy

Think the Fed Should Raise Rates Quickly? Ask Sweden How That Worked Out

Raising interest rates brought the Swedish economy toward deflation Ewa Ahlin—Corbis

Some investors are impatient for the Fed to raise interest rates. They may want to be a little more patient after hearing what happened to Sweden.

If you’re a saver, or if bonds make up a sizable portion of your portfolio, chances are you’re not the biggest fan of the Federal Reserve these days.

That’s because ever since the financial crisis, the nation’s central bank has kept short-term interest rates at practically zero, meaning your savings accounts and bonds are yielding next to nothing. The Fed has also added trillions of dollars to its balance sheet by buying up longer-term bonds and other assets in an effort to lower long-term interest rates.

Thanks to some positive economic news — like the recent jobs report — lots of people (investors, not workers) think the Fed has done enough to get the economy on its feet and worry inflation could spike if monetary policy stays “loose,” as Dallas Fed President Richard Fisher recently put it.

If you want to know why the argument Fisher and other inflation hawks are pushing hasn’t carried the day, you may want to look to Sweden.

Like most developed nations, Sweden fell into a recession in the global financial crisis. But unlike its counterparts, it rebounded rather quickly. Or at least, that’s how it looked.

As Neil Irwin wrote in the Washington Post back in 2011, “unlike other countries, (Sweden) is bouncing back. Its 5.5 percent growth rate last year trounces the 2.8 percent expansion in the United States and was stronger than any other developed nation in Europe.”

Even though the Swedish economy showed few signs of inflation and still suffered from relatively high unemployment, central bankers in Stockholm worried that low interest rates over time would lead to a real estate bubble. So board members of the Riksbank, Sweden’s central bank, decided to raise interest rates (from 0.25% to eventually 2%) believing that the threat posed by asset bubbles (housing) inflated by easy money outweighed the negative side effects caused by tightening the spigot in a depressed economy.

What happened? Well…

Per Nobel Prize-winning economist Paul Krugman in the New York Times:

“Swedish unemployment stopped falling soon after the rate hikes began. Deflation took a little longer, but it eventually arrived. The rock star of the recovery has turned itself into Japan.”

And deflation is a particularly nasty sort of business. When deflation hits, the real amount of money that you owe increases since the value of that debt is now larger than it was when you incurred it.

It also takes time to wring deflation out of the economy. Indeed, Swedish prices have floated around 0% for a while now, despite the Riksbank’s inflation goal of 2%. Plus, as former Riksbank board member Lars E. O. Svensson notes, “Lower inflation than anticipated in wage negotiations leads to higher real wages than anticipated. This in turns leads to many people without safe jobs losing their jobs and becoming unemployed.” Svensson, it should be noted, opposed the rate hike.

image (8)
Sweden

Moreover, economic growth has stagnated. After growing so strongly in 2010, Sweden’s gross domestic product began expanding more slowly in recent years and contracted in the first quarter of 2014 by 0.1% thanks in large part to falling exports.

As a result, Sweden reversed policy at the end of 2011 and started to pare its interest rate. The central bank recently cut the so-called “repo” rate by half a percentage point to 0.25%, more than analysts estimated. The hope is that out-and-out deflation will be avoided.

So the next time you’re inclined to ask the heavens why rates in America are still so low, remember Sweden and the scourge of deflation. Ask yourself if you want to take the risk that your debts (think mortgage) will become even more onerous.

MONEY Aging

Americans Want to Age in Place, and Your Town Isn’t Ready

Households headed by 70-year-olds will surge 42% by 2025. Who will drive them to the store?

The graying of the American homeowner is upon us. The question is: Will communities be ready for the challenges that come with that?

The number of households headed by someone age 70 or older will surge by 42% from 2015 to 2025, according to a report on the state of housing released last month by the Joint Center for Housing Studies of Harvard University, or JCHS.

The Harvard researchers note that a majority of those households will be aging in place, not downsizing or moving to retirement communities. That will have implications for an array of support services people will need as they age.

But the housing age wave comes at a time when federal programs that provide those supports are treading water in Washington. Consider the signature federal legislation that helps fund community planning and service programs for independent aging, the Older Americans Act. The OAA supports everything from home-delivered meals to transportation and caregiver support programs—and importantly, helps communities plan for future needs as their populations get older.

States and municipalities use the federal dollars they receive via the OAA to leverage local funding. The law requires reauthorization every five years, a step that has been on hold in Congress since 2011. Funding has continued during that time, with one exception: During sequestration in March 2013, OAA programs were cut by 5%; many have since been reversed, but other cuts now appear to be permanent.

A survey last year by the National Association of Area Agencies on Aging (NAAAA), which represents local government aging service providers, found that some states had reduced nutrition programs, transportation services and caregiver support programs.

Recovery since then has been uneven, according to Sandy Markwood, chief executive officer of the NAAAA. “In some cases, states made up the differences, but many programs still are not back to pre-sequestration levels.”

But here’s the more critical point: Even if all the cuts had been restored, treading water wouldn’t be good enough in light of the challenges communities will soon face.

“From a planning perspective, putting in place things like infrastructure and transportation services takes time,” Markwood says. “We don’t have the luxury of time here.”

Indeed, aging of communities is shaping up as a signature trend as the housing industry continues its slow recovery after the crash of 2008-2009.

Young people typically drive household formation, but the Harvard study notes that millennials haven’t shown up in big numbers because of the economic headwinds they face. Real median incomes fell 8% from 2007 to 2012 among 35- to 44-year-olds, JCHS notes, and the share of 25- to 34-year-old households carrying student loan debt soared from 26% to 39%. Meanwhile, home prices have been jumping, and qualifying for mortgage loans remains difficult.

Millennials eventually will account for a bigger share of households as more marry and start having families, according to the study. But for now, boomers are the story.

The oldest boomers start turning 70 after 2015, and the number of these households will jump by 8.3 million from 2014 to 2025. Most will be staying right where they are. Mobility rates (the share of people who move each year) typically fall with age: Less than 4% of people over age 65 moved in 2013, compared with 21% of 18- to 34-year-olds and 12% for those 35 to 45.

Mobility has been on a downward trend since the 1990s, and the housing crisis accelerated the trend, according to Daniel McCue, research manager at JCHS.

Aging in place could create problems in suburbs, which are designed around driving, McCue says. “People are going to need a more distributed network of services for transportation, healthcare and shopping in the suburbs. They’ll need some way to get to services or for the services to get to them.”

There is one possible silver lining in this story: The needs of aging-in-place seniors could spur better community planning. If so, the elderly won’t be the only group that benefits.

“When you do things to make roads safer or increase public transportation, or add volunteer driver programs, that’s good for everyone in the community,” Markwood says. “It’s not a zero-sum game.”

Related story: Why Most Seniors Can’t Afford to Pay More for Medicare

Related story: The State of Senior Health Depends on Your State

TIME

Housing Prices Are Rising Like Crazy Across the Country

First the forest: The S&P/Case-Shiller Home Price Index, with data just released for April, continues to climb at a double-digit rate. Prices for the index, which aggregates 20 metro areas around the country, rose 10.8% year-over-year. That’s a slight slowdown from last month’s 11.5% year-over-year increase, but it’s still quite a strong showing. On a monthly basis, prices rose 0.2% on a seasonally adjusted basis. Keep in mind that it’s important to tweak this data for seasonality, since home sales typically peak in the spring and summer. The quality of those sales seems to be improving too—a recent report from the National Association of Realtors noted that foreclosures and short sales accounted for 11 percent of all home sales in May, compared with 18 percent of all home sales for the same month a year ago.

Now the trees: It’s possible to think of the housing market as three separate layers of activity: highly speculative cities, cities that were never really prey to the housing bubble in the first place, and cities in-between, that have seen a boom and bust, but at a relatively moderate pace. The highly speculative cities (think Las Vegas, Phoenix, Miami) continue to show blazing recovery, though at a more moderate pace than formerly. David M. Blitzer, the chairman of the committee that issues the Case-Shiller Indexes, stated in a release that “last year some Sunbelt cities were seeing year-over-year numbers close to 30%.” Arguably, the current data is still quite good—year-over-year, Vegas is up 18.8%, Miami up 14.7%, and Phoenix up 9.8%.

In another tier, a city that never really seemed to have had its bubble burst in the first place, Dallas, set a new housing price record as prices climbed 9.3% year-over-year. To quote Trey Garrison of Housing Wire, “as locales go, it doesn’t get better than Dallas.” Homes there are also selling quickly, Garrison noted, as the average number of days on market dropped 12% from the prior year to a current 54 days (yes, less than two months) on market. Similarly, Denver home prices, up 8.9% year-over-year, hit an all-time high. Metrolist, the company that runs the Multiple Listing Service in the Denver area, reported earlier this month that days on market had dropped to 29, from 44 a year ago.

But it’s the performance of the in-between cities that seems most interesting this month. Boston showed an increase in the pace of its rising prices, from 8.3% year-over-year to 9.0%. Atlanta, Chicago, and Seattle all clocked monthly gains of at least 2.0% (2.0%, 2.0%, and 2.3% respectively) with strong yearly numbers as well (13.7%, 10.7%, and 11.2%, respectively).

Given the way the three tiers of the index are performing, it looks like the next few Case-Shiller data points (May and summer) may come in looking worse at first glance, as activity in the most speculative markets cools off. But an examination of those in-between cities — I’m hesitant to call them middle tier — shows that the housing recovery is broad-based, and it seems that it will continue to be for some time.

TIME housing

WATCH: House Teetering Over 75-foot Cliff Burned Down on Purpose

The roof is on fire

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A $700,000 house perched atop a 75-foot cliff over Lake Whitney in central Texas has been reduced to ashes — intentionally.

Portions of the 4,000 square-foot building began to crumble into the lake when parts of the cliff were destroyed in a landslide. Authorities ruled out options such as pulling the house back with a net and letting it fall into the lake by itself because of safety and cost issues. They deemed setting the house ablaze the cheapest and safest option.

The house began to burn down at 10:00 AM local time.

TIME housing

10 Best Markets to Flip a Home Right Now

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Martin Barraud—Getty Images/OJO Images RF

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This post is in partnership with 24/7Wall Street. The article below was originally published on 247wallst.com.

While home flipping activity in the U.S. has declined over the past year, in many markets the practice is still quite popular and provides high returns. Home flippers generally buy a home, renovate and sell it within six months. In some of the areas where home flippers had the most profits, the housing market and economic fundamentals support this type of investment, according to a recent report from home data site RealtyTrac.

What makes a good home flipping market? According to Daren Blomquist, vice president at RealtyTrac, a good home flipping market depends on the availability of distressed inventory, generally rising housing prices, and a growing economy. High numbers of distressed homes allow flippers to buy at a discount, while a strong market and economic growth allow flippers to sell at a premium. Based on recently released data from RealtyTrac, 24/7 Wall St. reviewed the best counties for home flipping.

The best markets for home flipping had to have had a relatively strong year in terms of generating returns for investors. Some of these markets were especially lucrative in the 12 months between April 2014 and March 2014. Notably, five of the best counties for home-flipping had gross returns on investment of more than 50% in that time.

Foreclosure rates in each of the best counties for home flipping increased measurably between the first quarters of 2013 and 2014, even as foreclosures declined nationwide. This means that home flippers could rely on a relatively sizeable inventory of distressed properties in these counties. Prince George County, Maryland and Campbell County, Kentucky had particularly dramatic increases, with the number of foreclosures jumping 136.8% and 238.5%, respectively.

MORE: The States With the Strongest and Weakest Unions

Economically depressed areas, which tend to have low housing prices, often draw home-flippers. But these are not necessarily the best home-flipping markets. As Blomquist noted, the balance between low prices and a flipper’s ability to successfully sell a property is both crucial and delicate. “Investors in [the best] markets may have to go against the grain a bit by diving into a market where there are still a lot of foreclosures,” Blomquist added. But “going against the grain, when done with careful research, is often the best way to beat out the competition and maximize profits on flips.”

Residents of many of the best counties for home flipping also earned considerably less than the typical price of an area property. Buyers in nine of the 10 counties best for home flipping had to shell out at least two times the county’s estimated annual median income to buy a home. In Bergen and Montgomery counties buyers paid 4.5 and 3.8 times the estimated median household income for 2014, respectively, both among the highest ratios nationwide. This primarily reflects recent gains in home prices in these areas. Blomquist explained that higher-priced markets allow flippers to sell their refurbished properties at attractive prices relative to the rest of the market.

Notably, half of the best counties for home flipping were located in Maryland, where a majority of key home flipping components seem to converge. Not only is Maryland a market where foreclosures have been increasing in recent years alongside rising home prices, but also the state’s economy is also relatively strong. According to Blomquist, this is likely due in part to the strong presence of government and government-related jobs in the state.

MORE: 10 Companies Paying Americans the Least

In order to be considered as one of the nation’s best housing markets for home flipping by RealtyTrac, counties had to have 100 or more single-family home flips between April 2013 and March 2014. Additionally, average gross returns on flips in these counties had to exceed 30% during this period. Gross returns do not include the costs associate with renovating a home. Counties also had to have below average unemployment rates as of March, a major indicator of economic strength. Finally, counties also had to have had a year-over-year rise in foreclosure activity in the first quarter of 2014, indicating ample inventory of potential properties for home flipping. Data on median home prices by county, as well as flips as a percentage of sales, by metropolitan area, are also from RealtyTrac. Data on median household income represent RealtyTrac estimates for 2014.

These are the 10 best markets for home flipping:

1. Prince George’s County, Md.
> Return on investment: 83.4%
> Increase in foreclosures: 136.8%
> Unemployment rate: 6.0%
> Number of flips: 347

Flippers in Prince George’s County earned more than 83 cents on the dollar, among the best gross returns on real estate investment nationwide. Further contributing to the quality of the overall flipping market, foreclosures rose by 137% between the first quarter of 2013 and the first quarter of 2014, providing new inventory for flippers. Additionally, the unemployment rate was just 6%, offering signs of a reasonably good economy for potential buyers. Unsurprisingly, Prince George County is located in Maryland, where incomes are relatively high. Median household income in the county is estimated at $71,931 for 2014, more than in the vast majority of counties nationwide.

2. York County, Pa.
> Return on investment: 72.5%
> Increase in foreclosures: 10.2%
> Unemployment rate: 5.9%
> Number of flips: 179

Home flipping activity has declined dramatically in York County since its peak at the end of 2012, when 37% of all metro area home sales were flips. Despite the decline, flipping homes in the county remains quite profitable. Real estate investors purchased potential flips for around $88,000 on average, considerably less than the majority of strong home-flipping markets. Over the last 12 months or so, flippers were able to sell these homes for an average of close to $152,000 — a gross return on investment of nearly 73%.

3. Baltimore County, Md.
> Return on investment: 70.8%
> Increase in foreclosures: 32.3%
> Unemployment rate: 6.1%
> Number of flips: 546

With a nearly 71% gross return on flipped homes in Baltimore County, it may not be surprising that there were 546 home flips between April 2013 and this past March, among the higher volumes of home flips nationwide over that period. Unlike many other counties located in Maryland, Baltimore County residents were not exceptionally wealthy, with an estimated median household income of just $64,393 in the county for 2014. Total foreclosures rose by 32% between the first quarter of 2013 and the first quarter of 2014, among the larger increases nationwide. This could continue to attract house flippers to the area.

MORE: The Most Polluted Cities in America

4. Campbell County, Ky.
> Return on investment: 69.9%
> Increase in foreclosures: 238.5%
> Unemployment rate: 6.3%
> Number of flips: 163

The median home price in Campbell County was $90,800 in the 12 months through March 2014, among the lower median prices nationwide. The area’s estimated median income for 2014 was comparably low as well, at slightly less than $60,000. This suggests homebuyers did not commit to mortgages well in excess of their income. And yet, foreclosures in Campbell County increased dramatically in recent months, jumping by 238% between the first quarter of 2013 and the first quarter of 2014, boosting the potential inventory for home flips. More distressed homes may help flipping activity return to 2013 levels, when more than 10% of all home sales were flips. Flipped homes accounted for just 3.4% of sales as of the beginning of 2014.

5. New Castle County, Del.
> Return on investment: 52.8%
> Increase in foreclosures: 28.6%
> Unemployment rate: 5.9%
> Number of flips: 117

Home flippers in New Castle County were able to turn a 52.8% gross profit on homes they purchased for an average price of $127,795 between April 2013 and March 2014. The median home price in the area of $174,800 in the same 12 months far exceeded the estimated median household income of $63,022 for 2014. The relatively high risk home buyers are taking may in part explain the recent rise in foreclosures, which increased by nearly 29% between the first quarter of last year and the first quarter of 2014. While the higher foreclosure rate indicates area homeowners may be struggling, the increased number of distressed properties is good news for home flippers.

Click here to get the rest of the list.

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