Government efforts that rig the system to produce more affordable housing are neither effective nor noble — especially when policymakers target a trend that has captured the public’s imagination while improving and increasing the housing stock.
Home flippers have become prominent players in the housing market as well as part of popular culture. Quite a few have become famous. According to IMDb, the internet movie database, “House-flipping shows have dominated the reality landscape for over 20 years and show no signs of slowing down.”
Not everyone is enamored with, or even tolerant of, flippers. To some critics, they are vipers who exploit prospective buyers by driving up prices. Profiteers who spoil old, charming neighborhoods. A Minnesota Realtor sums up the widespread irritation when she says “everyone loves to hate house flippers.”
But just as corporate owners are beneficial to the housing market, so are home flippers. That same Realtor points out what should be obvious to all when she says that “sometimes flippers are the only thing standing between a gorgeous vintage home and a bulldozer.”
California has even tried to quash their business model, and all the good that flows from it, in the name of “affordable housing.” Senate Bill 1079 (2021) and Assembly Bill 1837 (2022) tried to limit access to the housing market by corporations and flippers, who at times are the same. SB 1079 gave tenants and nonprofits 45 days to outbid investors at a foreclosure auction. AB 1837 restricted out-of-state and other bidders, and extended the first bill’s five-year period.
But some profit-seeking flippers found ways around the law, so legislators have had to go back to the policy lab to draw up a law that will “prevent investors from flipping distressed homes,” The San Diego Union-Tribune reported last month.
Two bills this year sought to tighten up the laws by addressing problems that emerged from the original legislation. Assembly Bill 1158 would have cracked down on flippers who allegedly manipulated the SB 1079 process by pretending to be owner-occupiers or who used straw buyers or created non-profit entities to complete a purchase. That bill died. Assembly Bill 1957, which passed the Assembly and now is in the Senate, likewise tries to clamp down on those who supposedly misuse this process.
