Externalities of residential property flipping

Lingxiao Li, Abdullah Yavas and Bing Zhu

Real Estate Economics, 2023, vol. 51, issue 1, 233-271

Abstract: This study investigates whether flipping activities impose an externality on the transaction prices of the neighboring nonflipped properties. Using a data set of residential property transactions in Clark County, Nevada for the period 2003–2013, we find that flippers impose a significant positive impact on the price of neighboring nonflipped properties in an up market, but a significant negative effect in a down market. This procyclical impact of flipping activity contributes to the volatility of housing prices, hence magnifying boom and bust cycles and increasing the likelihood of a mortgage crisis.

Date: 2023
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https://doi.org/10.1111/1540-6229.12413

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Persistent link: https://EconPapers.repec.org/RePEc:bla:reesec:v:51:y:2023:i:1:p:233-271

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