Bay Area house flipping on the rise

I recently saw this article on SF Gate about how the Bay Area is seeing the return of house flipping:

A Chronicle analysis of sales data from MDA DataQuick, a San Diego real estate research firm, shows that house flipping activity – where a home is bought and quickly resold – increased from 2008 to 2009 in several Bay Area ZIP codes.

For instance, the Pittsburg ZIP code 94565 had 52 flip sales in 2009. In 2008, it had 13.

DataQuick defines a flip as a recently purchased home that had previously sold within 21 to 180 days prior. The firm’s data do not capture homes bought at auctions.

You can read the whole thing here. Now, by house flipping, we’re talking about people who are buying distressed homes, fixing them up, and turning them back on the market within a year or less. Many people will say that this behavior helped fuel the housing bubble in the first place, as people who couldn’t necessarily afford homes invested anyway and earned a profit — but when the market dried up, they had all this money in there and no cash flow to cover the bills.

Is this any different? Well, the first thing is that any traction in the housing market is a good sign for the economy. The second thing is that you’re only really seeing this on distressed homes, with sales appealing to first-time buyers. This isn’t a multi-million dollar flip that people attempted before.

The danger area is when people invest their entire life savings into making a career out of house flipping. You’d hope that people have learned their lesson this time around and use it as a means to supplement their income rather than putting their family’s lives on the line. As the house-flipper in the article stated: