House Flipping is Making a Come Back

More than 6% of houses sold last year were “flips,” meaning that house flipping is making a comeback. The practice of purchasing a cheaper home, renovating it quickly, and then reselling it for a profit had dropped off since the housing bubble burst in 2008, after which it became hard to turn a profit on any housing in the United States.

Source: Rehab Financial Group

However, this resurgence might not be a good thing, Trulia’s Chief Economist Ralph McLaughlin says. “When you see flipping reach ten-year highs, economists like us tend to worry a little bit.” He does admit that the situation may not be the same as before the market crashed. These days, people are taking cues from the myriad of DIY shows on TV right now and making significant improvements to the houses they’re flipping, instead of just adding a coat of paint and sitting on the property until the value jumps.

Source: Erice Goetz, Diana Olick, CNBC

Not that that isn’t still the case. 2016 saw the highest jump in housing prices in the past four years, which means that even if flippers bought a bad investment and spent more money than they budgeted for to fix up a home, they’re more likely to make a profit anyways. However, the process takes months, and if the market were to take another turn like it did nine years ago, house flippers could find themselves in dire financial straits. But sometimes, the lure of large returns (and a chance to see some really satisfying results) is just too great to pull people away from this lucrative hobby.