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Paper eres2017_236:
Understanding Flippers and Their Impact on the Housing Market.

id eres2017_236
authors Garcia Gimenez, Carlos
year 2017
title Understanding Flippers and Their Impact on the Housing Market.
source 24th Annual European Real Estate Society Conference in Delft, Netherlands
summary Since the last financial crisis, researchers have included investors' strategy as a primary source for the acceleration of the house pricing boom that led to the last US real estate bubble. The motivation behind investors' behavior ranges from high-expected returns to reaction to popular real estate reports syndicated by media outlets and contagion from similar investment strategies adopted within neighborhoods. This exponential increase in house prices enticed many participants (known as ‘flippers') to profit from multiple transactions in short periods of time while the bubble inflated.So far the literature has not reached consensus on the identification strategy adopted to study the flippers phenomenon. Number of transactions, holding period and profit margin are used individually or combined to define flippers and their impact on house prices. We review the different identification strategies and empirically test their implication using real estate transactions data in South East Florida between 1996 and 2016. We also extend the literature in three ways: we measure the impact of flippers on both prices and returns; we identify the term structure of flippers returns beyond the normally adopted two years holding period; finally, we introduce a correction for capital expenditures which is essential in the game flippers play.
keywords House prices; Short term investment; Behavioral finance; Frequent trading; Term structure of returns%2Fpremia
series ERES:conference
type paper session
discussion No discussions. Post discussion ...
ratings
session Housing Markets & Economics
last changed 2017/11/18 16:20
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