Speed Reads

'the floodgates have opened'

The 'fix-and-flip' housing craze is back

It wasn't so long ago that loads of Americans were taking massive short-term loans from banks or private lenders, purchasing a mediocre home at a discounted price, fixing it up a bit, and selling it again at a higher price, all over the course of a few short months. The trend marked the buildup to the 2008 financial crisis, "a potent symbol of the real-estate market's excess," as The Wall Street Journal puts it.

Well, thanks to "skyrocketing home prices, venture-backed startups, and Wall Street cash," the home flippers are back. The number of investors who flipped a house during the first nine months of 2016 reached the highest level since 2007. Big banks like Wells Fargo, J.P. Morgan, and Goldman Sachs have begun offering credit lines — anywhere from $5 million to $150 million — to companies that give out loans to these high-risk investors. The market was expected to reach some $48 billion as of December 2016, The Journal reports.

The boom has been buoyed not only by high post-election housing prices but also low housing supply and low interest rates, all of which benefit the flipping business. House flippers made an average profit of about $61,000 on each sale in 2016, up from about $19,000 at the bottom of the real estate market in 2009.

Read more about the house-flipping trend at The Journal.