This year we’ve seen flipping at its highest rates since the pre-crisis boom, and as the year has progressed, so has flipping. Although the amount of homes flipped has decreased slightly since May of this year – when only 17 less homes were flipped in Southern California compared to June of 2005 – many realtors are still concerned that this is a precursor of another housing bubble.
Part of this concern stems from the fact that many experts blame flipping for stimulating the recent housing crisis. It’s undeniable, flipping did create some of the problems leading to the crisis, but it was not the sole contributor to these problems, and flipping nowadays has changed somewhat.
Back during the pre-crisis days, investors were able to buy homes with little or no money down. Combined with low interest rates and high home prices, this was the perfect market for an investor to buy a home and flip it for a large profit. But with such little risk involved, investors became careless, and eventually the bubble burst.
Nowadays, flippers abide by different rules. Banks have tightened their policies when it comes to giving loans, and so flippers are forced to invest their own money into their business. With more personal risk involved, someone flipping a home needs to be more careful about where and when they invest.
With these changes, many experts have high hopes that the recent growth in flipper activity is a sign of a growing housing market, not one about to crumble. It’s important to track this activity though, as it does have the potential for disaster if the rates continue to rise.
Has your business been impacted by the recent resurgence of flippers? Do you think these flippers are helping or hurting the market? What are your thoughts?
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