House Price Rebound Cruising for a Fall
Beware US real estate flippers that could cause recovery to flop
When flipping property is a big topic of conversation, we should have learnt by now to be nervous that a housing market is cruising for a fall.
The new flippers of US housing are not the individual speculators of the boom years, who boasted of making tens of thousands of dollars for a few weeks “work”, and they wouldn’t call their plans anything so gauche.
These investors, who have poured into the US housing market since its nadir, are hedge funds and private equity vehicles, and recently (belatedly) individual entrepreneurs. They may be planning to hold the property for a while and harvest rental income in the interim, but decent returns are predicated on a sale, and usually a quick one.
That makes them flippers – and it means that the recent run of strong housing market data may be more chimeric than real.