Return of the House Flippers

[rumpel]

Businessweek

That symbol of real estate fever—the investor who buys, fixes, and sells homes quickly—is back. This time it's a good thing

By Prashant Gopal

On an unusually hot March afternoon, the steps of the Maricopa County courthouse in downtown Phoenix fill with people in sunglasses, shorts, and flip-flops whispering urgently into cell phones. They are "flippers," here for the daily outdoor auction of foreclosed homes—bidding for themselves or clients who plan to buy houses cheaply and fix them up for a quick sale. And with the economy starting to percolate and real estate markets bottoming out, the auctions are drawing bigger crowds. "A year ago, bums outnumbered bidders at the courthouse steps," says Sergio Rodriguez, who bought and sold 48 properties last year even as falling home values scared other investors away. "Now the bums are way outnumbered."

Improbable as it sounds, house flipping—that hallmark of American real estate mania—is making a comeback. All around the country, but especially in some of the regions hit hardest by the housing slump, investors are swooping in on distressed properties and banging them into shape for sale to first-time home buyers, vacation-home seekers, and people looking for rental income. In Phoenix last year, the number of foreclosed homes that changed hands within six months of being purchased—the best statistical measure of flipping activity—increased 81% from the previous year, to 4,661, according to RealtyTrac, which compiles foreclosure data. Las Vegas flips rose 38%, to 8,042, in 2009; in Riverside and San Bernardino counties in California, they climbed 45%, to 17,203; in the Cape Coral (Fla.) area, flips almost tripled.

http://www.businessweek.com/magazine/content/10_15/b4173024165587.htm

[xchrom]

1. The way the 'bail out' has gone for main street Americans

You could see this coming.

[bemildred]

2. Bubbles R Us. nt

[Double T]

3. The heavily subsidized phony housing market is about to end.

Let's see what happens after the subsides and huge tax breaks go away. He who flips first may end up flipping last....or not at all.

[we can do it]

6. Duh Tax Breaks Don't Help Flippers

[Warpy]

4. Those guys were doing a good service, taking an unlivable house

and rehabbing it into something anyone would want to live in.

The real flippers are the bastards who snapped up new construction and held it off the market, waiting for it to appreciate, then selling it for an obscene profit without doing anything but neglecting it and making sure no one lived in it for a few months or years. They're the parasites.

The rehabbers work for their money.

[we can do it]

7. You Got That Right

empty decaying houses drag our neighborhoods down

[Go2Peace]

5. The lowering of capital gains is what caused the bubble, but you never hear that

The housing market used to be primarily people who actually lived in them or a small percentage who bought one or two investment homes. When they lowered capital gains it made it lucrative for big players and investment houses to get in. Like the stock market the housing market became less about the real price and more about speculation.

It would be easy to fix by either gradually increasing capital gains or offering staggered capital gains depending on how long you own it.