ESSAY: Why I Hate House Flippers, Part Two
The other side of the house flipping deal features the buyer—and more often than not, an inexperienced buyer that easily falls for the illusion of the false glamour of the cheap stage set before them which is sold to them by the house flipper con as the latest, greatest, most stylish and hip buy of the neighborhood.
These buyers generally have absolutely no clue about what things should really cost, and generally they are all too eager to get into their “dream house.” Since they have no conception of building costs — labor and material — they are only too happy to pay absurdly inflated prices, often reaching upwards of $185 to $350 per square foot for an inferior stage set in an “up and coming” otherwise cruddy neighborhood. They simply don’t believe that they are actually on the dumb end of, essentially, a pyramid scheme.
And there is that large category of flip house buyers who don’t really care about what they’re buying at all — because their intention is to redo everything just as fast as they can get credit to do so — which means that they are willing to pay far too much money for a property and intend to blow more of their money redoing the place! This is because the buyer also buys into the idea that the house they’re overpaying for will continue to appreciate annually by 15 to 25 percent, or more — just like all the house-flipper-design-shows say.
Of course, this is a strange and logically absurd strategy, yet it seems to be a quite currently popular.
The idea is a residence (or stage set) is unloaded on a flipper for $180,000.00 (and that’s a cheap one in the big cities) and will be worth $216,000.00 one year later, and $259,200.00 in two years, and $311,000.00 the year after that, and so on, and so they think they’ve made a great buy.
It’s amazing how short some people’s memories are. That’s what hours upon hours of watching television does to a person, especially when they’re tuned-in nightly to hour after hour of these house flipping/design shows which exist simply to pump up a belief in a false thing — and a huge percentage of Americans just love them and tune in daily, and that’s why they make these shows to fill the insatiable demand for absurdities sold as truths.
It’s a rare place in America anymore where one buys a home at a reasonable price with the initial intention of perhaps living there for years and years because they really like it and want to be invested in the neighborhood, the schools, the surrounding community, etc. Instead, so many of these homes are purchased with the initial idea that they’re going to be an easy gold mine for them.
Back prior to the turn of the 21st Century, it was conventional wisdom that one was doing pretty well if they owned a nice home in a neighborhood that appreciated annually at about three to five percent, but since the Federal Government has systematically destroyed the ability to earn a meaningful yield on cash savings, it has created the house flipping con phenomenon as an alternative vehicle to the stock market casino by which to earn a substantial yield on one’s money — that is, if you’re on the right side of the transaction.
We saw the apex of the housing bubble in the financial collapse of 2008. We are seeing the formation of another bubble which will end similarly, or worse, than in 2008.
Not one meaningful financial reform has been made since the collapse of 2008. Credit remains cheap and plentiful. Mortgages are getting made for obligations that are unjustified by any prior historically rational calculation of a borrower’s ability to pay, and the worshippers of “other people’s money” operate in a feeding frenzy of speed and greed to make as much profit as they can before the whole thing blows up — after all, it’s a volume business.
The whole thing is a shame and a disgrace, and has totally destroyed and rendered unreal the normal American residential housing market which used to be a great and realizable thing for so many regular Americans — but now, in most places, it is just another gaming casino run by con sellers selling to clueless buyers, and the result is that it is just another sad example of a great American institution that’s been destroyed by sickening greed on one side of the equation and ridiculous expectations on the other side.
I, for one, will be glad when I leave the city. Then I won’t have to watch this foolishness and stupidity every day. It’s a terrible thing to behold.