House flipping has been on a slow and steady rise since 2014, and now NPR reports that house flipping is at an eleven-year high.
Now, this news could be taken as either a great sign for house flippers or a warning sign for the economy at large. Let’s take a closer look at the numbers to understand what this high actually means.
The house flipping industry was partly to blame for the housing crash of the mid-2000s. In 2005 – when house flipping hit its peak – 8.2% of all single-family homes that sold nationwide were flips, and in hot markets like Las Vegas, the numbers got a high as 19%. Numbers like that signified that home prices were being inflated too quickly to be sustainable. That said, the vast majority of the blame for the crash falls to the banks who were offering incredibly risky mortgages to underqualified buyers.
While house flipping is at an eleven-year high now, the housing landscape looks quite different from the landscape of 2005. For one thing, banks have tightened up their lending practices, which means that there are a lot fewer adjustable rate mortgages floating around.
It’s also important to note that house flipping exploded in the years leading up to the crash – skyrocketing from about 150,000 total flips in 2003 to nearly 350,000 in 2005. The eleven-year high that we are currently experiencing is still nowhere near that 2005 level. In 2017, a little over 200,000 homes were flipped, which marked a slight increase from 2016. Yes, the numbers are going up, but they are doing so at a steady, manageable, non-bubbly rate. (Check out the graph in the NPR article to learn more.)
The steady rise in house flipping can be attributed to a strong overall housing market, which is supported by a low housing inventory and a strong economy. As new housing developments finally get completed over the remainder of 2018, we may see the pressure on home prices ease up, which should help quell any bubble fears.
In any housing market, there is always room for savvy investors to make their mark. To learn more about the 2018 housing forecast or about ZINC Financial’s current residential rehab loan programs, give our office a call at (559) 326-2509. ZINC funds house flipping loans for qualified investors in as little as seven to ten business days. Contact our team to learn more.