Jason Farrell

“The greatness of America,” Alexis de Tocqueville noted in 1835, “lies not in being more enlightened than any other nation, but rather in her ability to repair her faults.”

Eh… we might take issue with that this morning. Despite a devastating housing crash and a persistent recession, house flipping is back. So too may be the housing bubble.

It looks like people haven’t learned much in the last seven years. Back in May, NPR reported on the return of house flippers, noting, “Flipping is up in some parts of Southern California by as much as 45% over last year. And in April, the region reached a milestone: Home sales hit their fastest pace in seven years.”

It isn’t just in California, though. Check this out. Year-over-year appreciation in America’s hottest bubble markets:

DR Extra 6-25

Wondering where all that new Fed liquidity is going? Wonder no longer!

Flipping houses seems to be as American as apple pie. Cable TV has never ceased celebrating house flipping, even during the crash… Flip This House on A&E ran clear through the housing crisis and has been on for eight years and Flip Men has been a recent hit for Spike. All fed by the Bernanke money machine and low-interest loans.

Nationally, housing prices continue to rise rapidly. The Case-Shiller index of new home sales rose 2.1% last month, the highest level since July 2008. Standard & Poor’s reported that existing U.S. home prices in 20 metropolitan areas were 12.1% higher in April than a year earlier, the highest such gain in the history of either index. Most economists are applauding the growth, citing the boon it’s been to recovery of the broader economy.

Of course, that was the opinion back in 2002 as well. Back around the time The Daily Reckoning began forecasting that the mortgage finance bubble would burst, Paul Krugman famously blogged: “To fight this recession, the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that… Alan Greenspan needs to create a housing bubble…”

Mission accomplished. And we’re still not done paying the price.

Jason Farrell

For The Daily Reckoning

P.S. Haven’t signed up for The Daily Reckoning? We cover this and much more in our email edition… Click here to subscribe!

Jason Farrell

Jason M. Farrell is a writer based in Washington D.C. and Baltimore, MD. Before joining Agora Financial in 2012 he was a research fellow at the Center for Competitive Politics, where his work was cited by the New York Post, Albany Times Union and the New York State Senate. He has been published at United Liberty, The Federalist, The Daily Caller and LewRockwell.com among many other blogs and news sites.

Recent Articles

Addison Wiggin
A Short History of Speculative Excesses and Wealth Preservation

Addison Wiggin

For of all John Law’s faults, he at least understood that he who holds hard assets wins the day. Addison took the liberty of grafting supporting evidence together from his book with Bill Bonner, Financial Reckoning Day. Read on to see how originators of some of the worst ideas can give us some good ones too...


Greeks Turn to Gold on Bank Bail-in and Drachma Risks

Mark Obyrne

The Greek stock market is down 36% year to date; the risk of global contagion in the event of a Greek exit is very real. Ordinarily such a crisis would require a massive coordinated effort from global stakeholders, perhaps directed by the IMF or some other pan-national financial body. But not in this case. Mark O’Byrne has the full story…


The Market’s An Emotional Wreck –Now What?

Greg Guenthner

Remember, the great commodity boom took more than a decade to play out. Prices skyrocketed across the board. But what goes up must eventually come down. Gold and silver lost their wings in 2013. Copper went into a death spiral late last year. And I don't have to tell you what's happened with oil over the past six months...