As is typical in every housing cycle, property flipping escalates as prices and sales increase, allowing for profit maximization. According to a Bloomberg article today, US homes flipped within a 12 month period surged to 6.5% of total sales in Q4 2018. This was the highest share in seasonally adjusted data going back to 2002, according to real estate data firm CoreLogic. However, with the US property market now slowing and liquidity contracting, property flippers are feeling the pinch.
Meanwhile, in Vancouver, property flipping has taken a nosedive as panicked investors hit the sidelines amidst deteriorating margins and falling home prices. Properties flipped within a 12 month period hit a cycle high of 4.6% in January 2017 and have since fallen to just 1.4% of total sales in April.
Given the dramatic rise in home prices one would think property flipping would consume a greater portion of total transactions. Perhaps we need more HGTV exposure here in Canada.
Don’t expect flipping activity to pick up anytime soon especially when the head of CMHC takes a bearish stance on the multi decade long housing boom. In an interview with Bloomberg Siddall suggested, “In places like Paris and Sydney and Hong Kong and Buenos Aires [and New York], people rent. Whereas here [in Canada] we glorify homeownership. We think it’s the only vehicle for savings. This party ultimately comes to an end, and the people who are going to get hurt are young people.”
Not exactly something a speculator wants to hear from the man controlling the Canadian mortgage market…