The Role of House Flippers in a Boom and Bust Real Estate Market

Jin Man Lee and Jin Wook Choi

The Journal of Economic Asymmetries, 2011, vol. 8, issue 2, 91-109

Abstract: The single-family house transactions data of the Chicago Metropolitan Statistical Area during the 1995–2010 period revealed that the peak flipper participation in the housing market occurred between 2004 and 2006 and they realized a higher return than long-term house holders, especially between 2000 and 2006 when the housing market boomed. However, flippers had higher risk than long-term holders. The estimation results of the multilevel mixed regression model showed that when more flippers entered the housing market, they created a positive upward movement in home price. The multivariate adaptive regression splines (MARS) model revealed a nonlinear relationship between housing prices and the fixed and variable effects of flipper participation in the housing market. Multiple knots indicated that flippers impacted the market differently as the frequency and magnitude of flipper participation in the housing market changed.

Keywords: House flippers; Real estates; Asymmetric information; Boom and bust; House price; MARS (search for similar items in EconPapers)
JEL-codes: C31 C41 R11 R21 R30 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joecas:v:8:y:2011:i:2:p:91-109

DOI: 10.1016/j.jeca.2011.02.008

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