[quote=AN]I don’t get your argument about decrease in supply. It might be decreased in the scenario where there were no flipper, then flipper step in. But as soon as they start flipping, the lost supply get reintroduce into the system. It’s a closed system. Supply doesn’t go away unless they demolish it and not build anything in its place. Flipping by definition turns property around asap.
Btw, if you say flipping is a big part of the problem, then removing flipping will fix most of the problem. That’s where I disagree with you. I think even if flipping doesn’t exist, the bubble would still happen if lending standard was loose.[/quote]
Yes, as I stated in my post above, **eventually** the market will settle things. But you are underestimating the **time lags** in the RE market, and the distortions and damage that can be done in the interim.
Prices might have risen with loose lending, but they would not have reached the extremes that they did without the speculation. There is a limited amount of **organic** demand, and prices would have reflected that without all the speculation.
Here’s a question: let’s say all the flippers and “investors” were removed from the market tomorrow. No investors looking for a place to hedge against inflation, no wannabe landlords, no large pools of cash from China and other places…just real buyers who need a single place to live are left to buy. Do you honestly believe this wouldn’t have an effect on prices?
