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Minnesota’s high rank in quick-turn resales shows confidence in the market.
What is this seeming fixation my home town has with ranking itself.
I have no beef with flippers. I don't think this reflects an improving and healing market, though. The prices for a starter home are beyond the means of the people who want to buy a starter home.
Once the flippers buy a house for $80k from a wholesaler (meaning it never appeared on the market so the first-time buyers never had a chance at it), they install the Italian tile bathroom and the granite countertops and the stainless-steel appliances and sell it for $175k, it takes a ~$75k income to afford to buy it. That's above the median household income. So, the median income won't buy a starter home. This current activity is solely for the move-up market.
The move-up market is limited to those who already have a starter home and want to move up (by definition). So the first-time homebuyer looking for a starter home is shut out of the market. In a couple of years this will bring down the move-up market, as anybody who can move up already will have.
It's yet another market rigged to benefit connected insiders, as the flipper David Holm openly admits. We've seen over and over how rigged markets fill the pockets of the insiders at first, and then collapse to the great detriment of the rest of us. Well, it's happening again.
swmnguy: "The move-up market is limited to those who already have a starter home and want to move up (by definition). So the first-time homebuyer looking for a starter home is shut out of the market"
What do you think the people with the starter homes that move up do with their starter homes?
"What do you think the people with the starter homes that move up do with their starter homes?" Er, sounds like they sell them to flippers.
Flipping degrades the housing market so that only the mid-middleclass and above can afford to purchase. This is indeed a scam that stacks the odds against those in our society with a household income under six figures annually.
More often than not, the repair work done by these flippers is of poor quality and will not last, or does not look all that well done. Buyers should look at the sale history of a house and if a house was purchased in the last 2-3 years & is being sold, they should ask why. If they decide to consider the house, they should also investigate whether the proper permits were obtained for the work. Certain problems may take a while to show up: tiles may have been improperly installed (and no permits would have been required for this work). They may start popping or cracking. In a bathroom, the poor work (especially in a shower, but even in the floor) may allow water to seep through the grout & damage the underlying floor/walls. If a basement ceiling has been enclosed, where do the water pipes run? In some MN homes, some water pipes in the basement run along along the exterior walls. This may never have been a problem if the basement had either a drop ceiling or no ceiling. However, since putting up sheet rock makes the basement look nicer, some flippers enclose the ceiling. This prevents heat from getting to the pipes along the exterior walls, and at some point in the future, they may burst. Putting up sheetrock on the walls can create dampness & mold issues in a basement, which won't be apparent to a new buyer right away (or until a damp summer comes along). I personally would NEVER purchase a house that has been flipped (or I suspect has been). The flippers have absolutely no interest in being sure the work is done in a way that it will last.
Part of the problem is there is little regulation of flippers. It wouldn't be hard to define a flipper (someone who buys and sells more than 2 houses in a 2 year period, or 3 houses in a 5 year period). It would be smart for communities to impose additional regulations on flippers, because failure to do so degrades the community's housing stock long-term.
You can tell when you look at houses that are for sale - they all have the same Home Depot bathroom and kitchen.
Someone is benefiting from the mortgage crisis.
yoschu: "Flipping degrades the housing market so that only the mid-middleclass and above can afford to purchase. "
Yup, just terrible when a flipper takes a run down house and fixes it up. Hurts the whole darned neighborhood. It also increases property taxes collected for that property. Which seems a little backwards to me. Fix up a house, improve the neighborhood and get taxed MORE?
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