A flip is defined as a home that is bought and sold again within 12 months.
Gradually rising home prices are bringing more house flippers out of the woodwork, and that may be a sign of an out busting housing market. The number of active home flippers last year was the highest in nearly a decade, and it has not stopped over time, but increased.
"For the year, 21 percent of all properties flipped were purchased out of foreclosure, but that is down from 27 percent in 2012 and 32 percent in 2011. Investors are finding discounted buying opportunities outside of the public foreclosure process." says Daren Blomquist, vice president of RealtyTrac.
Approximately 180,000 family homes were flipped in 2015, according to RealtyTrac. Flipping increased in 75 percent of U.S. markets, and the profits are growing as well.
"When home flipping numbers go up, it is usually an indication that the housing market is in trouble," said Matthew Gardner, chief economist at Windermere Real Estate in Seattle.
Flippers end up having to take bigger risks for smaller profits where even minor miscalculations or sudden market swings can lead to huge losses. As the flipping bubble implodes, and as reality replaces perceived guaranteed returns, many flippers will be hit with losses and will be dragged out.
House flipping - buying and reselling a home to make quick money - has risen in some hot housing markets, prompting concerns that local housing bubbles could be developing.
The concern now is that prices are rising too fast, not because buyers can afford to pay more but because of extremely short supply of homes for sale. Home flipping can push prices artificially higher.