This morning my Google Alerts sent me a story from Zillow about supermodel Cindy Crawford and her husband who successfully flipped a home in Malibu, recording a $7,000,000+ gain on sale. Pretty impressive, eh? Which got me thinking: “Are we approaching the end of this house flipping cycle now that one of the world’s most famous fashion models just made a killing flipping a house in Malibu?” Could this be one of those symbolic moments where people will look back and say, “Oh yeah, Housing Bubble 2.0 was toast the moment Cindy Crawford flipped that house? We should have seen it then but we were too blind and too caught up in the house flipping bull market to pull back a little bit and start withdrawing our money from the market.”
For the record, I think that the house that Crawford and her husband flipped was spectacular. Her business sense is off the charts.
Ask me this in the year 2020, with the full benefit of 20/20 hindsight, and I’ll be able to tell you the answers to these questions.
Actually, I believe that this house flipping cycle still has some legs left for another few years since there’s still a lot of distressed loans from Housing Bubble 1.0 (that ended way back in 2008 for California!) lingering on the books of the some of the biggest banks, who are loathe to release too many of these homes onto the market for fear that it would disrupt the limited supply/high demand phenomena that currently exists in most major real estate markets.
For those who want to do a little more investigating about the house flipping cycle, check out the always excellent RealtyTrac and their Q2 2015 House Flipping Report. There’s some caution in their analysis but nothing conclusive. Definitely read what they have to say to get a feel for the trends in flipping. It’s worth your time.