By Nick Timiraos
LADERA RANCH, Calif. (MarketWatch) — Rising home prices have fueled the return of a practice that some blamed for inflating the bubble: house flipping.
House in Chicago’s Lincoln Park whose prior owner halted a renovation of the 1888 structure. Construction resumed after the gutted house was sold in 2012.
While flipping is re-emerging nationwide, brokers say it is happening most in California, where home prices have risen sharply over the past year. Six of the 10 largest price gains in major U.S. cities over the past year have been in California, according to Zillow. In April, home values rose by 25% from a year earlier in San Jose, San Francisco and Sacramento, and by 18% in Los Angeles.
“When prices rise, this trade works. It’s not anything more sophisticated than that,” said Christopher Thornberg, an economist with Beacon Economics in Los Angeles. Prices are shooting up due to the short supply of homes for sale, which partly reflects the reluctance of homeowners to list homes at prices down sharply from their peak.