Externalities of residential property flipping

Externalities of residential property flipping

This study investigates whether flipping activities impose an externality on the transaction prices of the neighboring nonflipped properties. Using a data set of residential property transactions in Clark County, Nevada for the period 2003–2013, we find that flippers impose a significant positive im...

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Bibliographic Details
Published in:Real estate economics Vol. 51; no. 1; pp. 233 - 271
Main Authors: Li, Lingxiao, Yavas, Abdullah, Zhu, Bing
Format: Journal Article
Language:English
Published: Bloomington Blackwell Publishing Ltd 01-01-2023
Subjects:
distressed property
externality
flipper
house price
Online Access:Get full text
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Summary:This study investigates whether flipping activities impose an externality on the transaction prices of the neighboring nonflipped properties. Using a data set of residential property transactions in Clark County, Nevada for the period 2003–2013, we find that flippers impose a significant positive impact on the price of neighboring nonflipped properties in an up market, but a significant negative effect in a down market. This procyclical impact of flipping activity contributes to the volatility of housing prices, hence magnifying boom and bust cycles and increasing the likelihood of a mortgage crisis.
ISSN:1080-8620
1540-6229
DOI:10.1111/1540-6229.12413