An Empirical Analysis of Residential Property Flipping

Posted: 30 Jul 2009

See all articles by Craig A. Depken

Craig A. Depken

University of North Carolina at Charlotte - The Belk College of Business Administration - Department of Economics

Harris Hollans

Auburn University - College of Business

Steve Swidler

Lafayette College - Department of Economics & Business; Auburn University - College of Business

Date Written: July 30, 2009

Abstract

Beginning with a time-dependent definition of a house flip, the analysis examines flipping activity in Las Vegas from 1994 through mid-2007. We find that flip homes tend to be older and smaller than non-flip homes. Moreover, as the residential property market in Las Vegas begins to take off, flip homes become a more significant percentage of total sales. At the height of the housing boom in 2004, a typical flip produces an annual rate of return exceeding 60%. Even after adjusting for opportunity costs, this translates to economic profits of nearly 20%. However, shortly thereafter, the frenetic pace of the market begins to subside, and by 2007, economic returns to a flip fall to 0.

Keywords: residential property flipping, house prices

Suggested Citation

Depken, Craig A. and Hollans, Harris and Swidler, Steve M., An Empirical Analysis of Residential Property Flipping (July 30, 2009). Journal of Real Estate Finance and Economics, Vol. 39, No. 3, 2009, Available at SSRN: https://ssrn.com/abstract=1441312

Craig A. Depken

University of North Carolina at Charlotte - The Belk College of Business Administration - Department of Economics ( email )

Charlotte, NC 28223
United States

Harris Hollans

Auburn University - College of Business ( email )

Department of Finance
303 Lowder Business Bldg.
Auburn University, AL 36849
United States
(334) 844-3009 (Phone)
(334)844-4960 (Fax)

Steve M. Swidler (Contact Author)

Lafayette College - Department of Economics & Business ( email )

Easton, PA 18042
United States
610-330-5303 (Phone)

Auburn University - College of Business ( email )

Auburn, AL 36849
United States

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