Many people make money by fixing homes and selling them for a quick profit, called “house flipping.” However, many of these people are leaving the market at the current time as profits have greatly declined:
Here’s one consequence of the slowing U.S. housing market: Home flippers are heading for the exits.
Homes that were resold within 12 months after being purchased made up 7.2 per cent of all transactions in the first quarter, the biggest share since the start of 2010, Attom Data Solutions reported Thursday. Meanwhile, the average return on investment, not including renovations and other expenses, dropped to 39 per cent, an almost eight-year low.
Speculators are on the housing market’s front lines, where softening price growth, waning demand and longer times to sell can turn quickly into shrinking profits, or even losses. Purchases of previously owned homes fell 4.4 per cent in April, the 14th straight year-over-year decline, according to the National Association of Realtors.
“Investors may be getting out while the getting is good,” Todd Teta, chief product officer at Attom Data Solutions, said in the report. “If investors are seeing profit margins drop, they may be acting now and selling before price increases drop even more.” (source, source)
The housing market is one of many indicators of economic stability in the US. As I wrote in April 2019, the patterns in housing are starting to bear a semblance to those of the early 2000s leading up to the collapse of 2007.
There is a lot of talk about the economy being great, but it really is not. Most of the jobs that are available are low-paying, and by that I should clarify is that one cannot afford to pay rent from the income earned and there is little opportunity for advancement, and they also could disappear quickly if the economy were to make a bad turn.
It appears that another real estate “bubble” is forming right now, and probably will not “pop” until the next election around 2023/2024, in order that it can be blamed on the Democrats for political reasons.
As I have emphasized, this is not the time to stop working, but to work harder and save up as much as possible, for just as with the age-old tale of the Grasshopper and the Ant, those who worked hard in the summer will be ready for the winter, while those who did not work will suffer even to their own destruction.