flippers make the real estate market more liquid, in the same way high-frequency trading does for stocks.
Flippers take the risk of the market falling while they're flipping - that's the price they pay for their profits.
Flippers take the risk of the market falling while they're flipping - that's the price they pay for their profits.
It pains me to watch people apply simplistic theoretical laws of supply and demand to something as complicated as housing. The map is not the territory. There are massive costs to increasing supply, as well as psychological/community costs to moving homes, which are not cleanly captured in any Economics 101 textbook.
As a seller, would you rather wait a year to make a bit more money? That wouldn't be good. That would be crappy.
I think you’ve bought into the tik tok narrative that somehow it’s zillows fault that houses are expensive.
I'm buying a long term asset, so the liquidity of the housing market is not relevant to me, unless I'm actually buying for a specific short term, like a planned work period.
Liquidity of the housing market is only important to the agents and the loan originators because they make money on the flow.
No. Like a normal person, I bought my house to live in and to improve and to stay in for a long period of time. It isn't a speculative investment vehicle.
This is an industry I actually know a teensy bit about. Normal people don't need to sell a house in two weeks. That is an abnormal condition brought on by stupid, disinterested money flooding the market and the idea that everyone must be hyper-mobile all the time is one brought on by the more deranged, "humans exclusively acting as work producing automatons" part of a market economy. Solidity and permanence are valuable. I'd go so far as to say that when you take into account the benefits of long-term residence and ownership--and they are benefits you will not see in your ML model, such as a cohesive neighborhood where you actually know and maybe even interact with the people who live around you--that it might even be a positive to discourage market thrash. You know. For humans, and not investors.
A lot of people buy starter homes, or homes in areas they do not plan to stay 10+ years, or homes they outgrow. That’s all normal too.
so you do agree that it takes time to buy and sell real estate. The reason liquidity is better for market efficiency is that liquidity allows the price of the asset to move towards the "true" price, where either party of the transaction doesn't feel they've been cheated.
If you claim that house flippers are "cheating" the long term buyers, then you must also agree that the market is currently inefficient, and that the long term buyers is paying above the "true" price. Liquidity would actually alleviate that problem!
if you don't agree that flippers are cheating their price higher, then you must also agree that the long term buyers are getting a better deal.
So either way, liquidity makes the market more efficient, and results in the "true" price of the asset to be revealed sooner and easier.
It would not change my physiological need for shelter, no
“Oh I might not be able to sell this for a profit in two years, guess I’ll die in the street”
Imagine if drinking water was treated as a speculative asset, with large percentages of a countries water supply being stored in tanks and sold back-and-forth on paper between capital-rich investors instead of actually being pumped to where it was needed through pipes.
then you'd see people not waste any water at all, and fix any pipe leakage, and conserve water, and use water efficient agriculture methods etc.
The price of a commodity determines how much and how easily it is available. The fact that water is so liquid (both in terms of the price, as well as being an actual liquid) is because of the high amount of investments made into obtaining it over the past centuries. Liquidity of any asset (or commodity) is a good feature to have imho.