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Is it worth buying a fixer-upper in Philly?

A new report looks into the pros and cons

Recently, various reports have highlighted Philadelphia as a great city for folks who want to get in on the fixer-upper business. But is buying and flipping really a bargain?

Not entirely, according to recent findings by real estate website Zillow. In Philly, fixer-uppers are listed at just 14 percent below market value. That means buyers only save about $17,000 for renovations before they break even on the home.

At first glance, that may seem like a good chunk of change. Yet that amount wouldn't even cover the average kitchen renovation here, which on average costs more than $25,000, according to WalletHub.

Nationally, the numbers are even lower: Fixer-uppers are listed at just 8 percent less than market value. That means buyers only save about $11,000 for renovations before they break even.

Philly fixer-uppers are listed 14 percent below market value

For the Zillow report, researchers looked at some 70,000 real estate listings from 2015 that had words like "fixer upper" or "TLC" or "needs work" in the description. They then aggregated the data at metro and national levels. Any region that was included had to have at least 100 fixer-upper listings.

Interestingly, Philly and Los Angeles ended up having the highest percentage of fixer-uppers listed in the country, or 2.5 percent of the market. But Zillow chief economist Svenja Gudell says that it's still a pretty small share of listings overall.

"Philadelphia is also, simply, one of the oldest cities in the country. It likely has at least a somewhat higher share of older homes in need of some work than a younger city that is quickly growing and adding lots of new housing," she says.

Gudell also points out that while an 8 (nationwide) or 14 percent (Philadelphia) discount does seem pretty low, it makes sense given the current "hot" housing market. Philly in particular just experienced one of its best housing quarters since pre-recession era, and officially transitioned from a buyer's to seller's market. That may mean that for many people, buying a fixer-upper in Philly isn't just an option—it's the only option.

Says Gudell, "It could be these homes are all that’s available in buyers’ budgets, and they’re willing to pay for them if it means they can successfully buy a home and end their home search."