House Flipping Frenzy Returns to U.S. Real Estate
House flipping is once again on the rise among U.S. real estate investors. Flipping, which refers to homes that are purchased and sold within one year, echoes the height of the housing bubble before it burst in 2008. However, the majority of industry experts say that the market dynamics are different this time.
“The housing market is in full boom mode, with prices up and homes selling quickly and consistently, which gives flippers more confidence to jump into the market,” says Daren Blomquist, senior vice president of ATTOM Data Solutions, an Irvine, California-based property data firm. “At the same time, they don’t have to compete against a flood of new construction like they did during the last spike in flipping in 2005-2006, when homebuilders were building like crazy.”
Blomquist says that flippers today look for homes that are in older neighborhoods in an effort to appeal to buyers who might prefer to purchase a new house but cannot find one in their price range. Although flippers have gotten a bad reputation for damaging neighborhoods by driving up prices too quickly, in some cases, flippers can actually add value to a neighborhood. Flippers help by taking on distressed properties that first-time homebuyers wouldn’t necessarily want because the repairs needed would be too expensive for the homebuyers to finance conventionally.
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