House Flippers And The House Price Bubble

I know some people think it’s obvious that speculative house flippers played a major role in inflating the house price bubble, but it certainly wasn’t obvious to me—the price boom seemed perfectly consistent with a mass public becoming delusionally over-optimistic about home prices. But I did a new column about some empirical research which shows that flippers were a big part of the market, and drawing out a couple of policy implications. One is that interest rate policy didn’t matter so much to the price boom (flippers don’t care about interest rates) but that leverage mattered a lot (flippers care about this very much, and it’s extremely difficult for bubble-spotters to get leverage to go short on houses) so basically we need to regulate leverage more.