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.
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Kelly Gonsalves is a sex and culture writer exploring love, lust, identity, and feminism. Her work has appeared at Bustle, Cosmopolitan, Marie Claire, and more, and she previously worked as an associate editor for The Week. She's obsessed with badass ladies doing badass things, wellness movements, and very bad rom-coms.
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