“BTW, many of those home being flipped in East County were likely formerly uninhabitable and would not qualify for loans in their former condition. The flippers are fixing homes and making them marketable. The FHA buyers are getting homes they can afford (remember qualifying is tough) that are in turn key condition and they dont have the money to fix up even cosmetic fixer homes. In low end markets like that, I think the flippers serve a far more important role than in higher end ZIPS.”

I concur with this. I just can’t quite pin down what a reasonable return should be. In my mind I separate “flipping” from “rehabbing” but maybe this is a false distinction. I call the value added in depth repair/remodeling “rehabbing” and the speculative cosmetic fixups “flips”. A rehabber is due a profit margin commensurate with risk but I don’t want to pay off a flipper. The problem is telling the difference.

When I look up the prices flippers paid I just don’t want to buy a house for 270k that was bought for cash for 150k. I assume I could fix the house for much less myself.

Where are the 150k houses on the MLS? They do not exist. The government lending is putting money straight in the pockets of the speculative flippers. They are really a big beneficiary at the expense of the ultimate buyer. I know I focus on insane margins and it is probably true they have come down a lot. Minus the easy money, the speculative flippers would probably disappear. Legitimate rehabbers will always have a market.