It’s not just the flippers…it’s the clueless buyers of these flips, with their 3.5% FHA loans (and seller concessions!) who are mesmerized by granite and stainless steel-wrapped junk appliances, who are screwing up this market.

Those fools! Paying high mortgage insurance premiums in order to buy homes to live in. Don’t they know that they’re hurting the cash investors who want to buy and then rent those same homes back to them? Someday they’ll learn.

Seriously though, your point is valid for the silly flips at $500+/sf. But there are probably some people using those FHA loans that won’t default and will eventually be in good shape 5-10 years from now.