Investors have re-emerged in home flipping, scouring markets to find homes they can make over to earn a profit. The practice – once blamed for helping to fuel the housing crisis a decade ago – is now a welcome sign to some city officials who say it's helping to solve an affordability crunch.
States like Florida and Nevada continue to have a large stock of foreclosed homes, and flippers are stepping in to renovate homes that, at the same time, help battle neighborhood blight and create more options for first-time and low-income buyers. In many cases, the flipped homes being sell well below the rest of the market. Industry analysts point to that as a sign that it's filling a shortage of affordable housing.
"This flipping activity could be seen as a social good if it's bringing houses up to standards and putting them back on the market," says Steven Swidler, an Auburn University professor who studies home flipping.
Still, flipping can drive up home prices too, Swidler cautions.
"In other areas," he says, "it could be putting it beyond the price points for affordable housing for some people. It's all about location, location, location."
Nevertheless, today's flippers are not the same as they were from years ago.
"Conditions are different now. You can't just buy a house and expect to make a profit," Swidler says. "In many cases (flippers) have to go in there and replace wiring, put in new refrigerators. Some of these places had holes in the walls. It took extensive work to renovate them.",
This isn't the market any more for home flipping. Cape Coral/Fort Myers has had one of the strongest price rebounds in the country, coupled with an aggressive foreclosure disposition strategy, the homes available for flipping just aren't there.