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Seeking Alpha in the Housing Market

Author

Listed:
  • Michael LaCour-Little

    (California State University at Fullerton)

  • Jing Yang

    (California State University at Fullerton)

Abstract

We examine short term trades in the housing market over the period 2000–2013 using nationally representative data across multiple U.S. housing markets. Such trades, often characterized as “house flipping”, have gained currency in recent years with reality television shows depicting success and failure. We find evidence of returns in excess of market house price index growth (which we call alpha) during certain time periods with results that also vary across distressed versus non-distressed acquisition strategies.

Suggested Citation

  • Michael LaCour-Little & Jing Yang, 2023. "Seeking Alpha in the Housing Market," The Journal of Real Estate Finance and Economics, Springer, vol. 67(3), pages 319-374, October.
    • Handle: RePEc:kap:jrefec:v:67:y:2023:i:3:d:10.1007_s11146-021-09853-1
    DOI: 10.1007/s11146-021-09853-1
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    References listed on IDEAS

    as
    1. Xin He & Zhenguo Lin & Yingchun Liu & Michael J. Seiler, 2020. "Search Benefit in Housing Markets: An Inverted U‐Shaped Price and TOM Relation," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 48(3), pages 772-807, September.
    2. Anglin, Paul M & Rutherford, Ronald & Springer, Thomas M, 2003. "The Trade-Off Between the Selling Price of Residential Properties and Time-on-the-Market: The Impact of Price Setting," The Journal of Real Estate Finance and Economics, Springer, vol. 26(1), pages 95-111, January.
    3. Clapp, John M. & Eichholtz, Piet & Lindenthal, Thies, 2013. "Real option value over a housing market cycle," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 862-874.
    4. Curtis R. Taylor, 1999. "Time-on-the-Market as a Sign of Quality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(3), pages 555-578.
    5. Craig Depken & Harris Hollans & Steve Swidler, 2009. "An Empirical Analysis of Residential Property Flipping," The Journal of Real Estate Finance and Economics, Springer, vol. 39(3), pages 248-263, October.
    6. Zhenguo Lin & Yingchun Liu, 2008. "Real Estate Returns and Risk with Heterogeneous Investors," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 36(4), pages 753-776, December.
    7. Jessica Rutherford & Ronald C. Rutherford & Elizabeth Strom & Lei Wedge, 2017. "The Subsequent Market Value of Former REO Properties," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 45(3), pages 713-760, July.
    8. John R. Knight, 2002. "Listing Price, Time on Market, and Ultimate Selling Price: Causes and Effects of Listing Price Changes," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 30(2), pages 213-237.
    9. Gatzlaff, Dean H & Haurin, Donald R, 1997. "Sample Selection Bias and Repeat-Sales Index Estimates," The Journal of Real Estate Finance and Economics, Springer, vol. 14(1-2), pages 33-50, Jan.-Marc.
    10. Philip Seagraves & Paul Gallimore, 2013. "The Gender Gap in Real Estate Sales: Negotiation Skill or Agent Selection?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 41(3), pages 600-631, September.
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    More about this item

    Keywords

    House flip; Arbitrage; Distressed sales;
    All these keywords.

    JEL classification:

    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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