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Watch the housing market collapse from the comfort of your own couch

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April 07, 2008 – Comments (3)

A couple of years ago my wife and I stumbled across a television show on TLC called "Flip that House."  The show follows individuals as they purchase and fix homes with the intention of "flipping" them quickly to turn a profit.  The people that the show follows are usually located in the western United States, frequently in California.  I found it interesting, so I decided to use my DVR to always tape the last three episodes that have aired.  At first when I occationally tuned in to the show, most of the flippers...especially the professional ones who did this sort of thing for a living, usually made big bucks for their efforts.  Yet for some strange reason, whenever I watched I always found myself rooting against the flippers, absolutely loving it when they got crushed and either end up living in or renting out the home that they were planning on making a quick buck on.  Is is wrong for me to root for the flippers to get screwed?  Probably, but who cares I just can't help it.  It feels so good.  They had a large hand in creating the housing bubble which for years drove the price of housing up well beyond reach for hardworking people who just wanted a nice place for their families to live.   

Fast forward to today.  I hadn't watched Flip that House in a couple of months, it's usually a last resort that I toss on if I can't find any other good shows while I'm unwinding.  I flipped it on after having a few beers this weekend.  It was fantastic.  All of the "professional" flippers were getting completely destroyed.  I was three for three in pro flippers being forced to eat it and rent out the homes that they were working on.  In one episode the professional bought a two bedroom home in California, which was something like 10 square feet, for around $350,000.  At first he was planning on putting a huge addition on it, more than doubling its size.  I was like, ohhhhh boy this guy's going to get screwed.  Fortunately for him, being a seasoned flipper he sensed that the market was turning on him early on and he scrapped his plan to build the addition.  Instead he decided to get the heck out of Dodge, putting only $5,000 back into the house before putting it back on the market.  Most of these flippers sink tens of thousands of dollars into renovations, so $5,000 basically consists of mowing the lawn and mopping the floors.  When he met with his real estate agent to get an appraisal he was informed that he would only be able to list...not actually get, but list...the house for $300,000 which would amount to a sweet $50,000 loss in a short period of time.  Much to my pleasure he ended up renting out the house. 

I feel extremely sad for the families who ended up losing their homes in this whole mess, but I do not have a whole lot of sympathy for the flippers.  Anyhow, if you want a good laugh check out the show some time.  It will make you feel better about the house that you purchased at the height of the bubble.  Here's a link to the show's official site: Flip that House

Deej

3 Comments – Post Your Own

#1) On April 07, 2008 at 9:21 PM, zversyp (< 20) wrote:

Not all those flippers are bad, at least in my opinion.  The few times I've seen that show most of the people seemed to do a lot of renovation, which does add a lot of intrinsic value to a home, usually more than the repair costs.

I think that the housing bubble was caused more by people inflating the price of homes over a short period of time, i.e., buying a house, doing almost nothing to it, then waiting a few months to a year until the price suddenly rose in imaginary value, then sold or refinanced.

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#2) On April 07, 2008 at 10:27 PM, GS751 (27.32) wrote:

House values are wierd.  Some things do and don't add value to a home.  Usually tech stuff does not add long term value to a home.

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#3) On April 08, 2008 at 6:26 AM, Capsperson wrote:

I watched this the other day, too, and saw a Flipper almost lose his shirt when the two bedroom home he bought had major water damage.  They had to jack up the house to pull out the lumber to replace it.  Amazing.

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