House flipping is on the rebound — and that’s not good for everyone

House flipping is back.

Flipping, defined as the sale of a home at least twice within a year, made up 6.1% of all home sales in 2016, up from 5.3% the previous year and the highest level since 2006, real estate research firm Trulia says in a new report.

The trend at least partly signifies rising prices that are attracting investors. The National Association of Realtors said Tuesday the median existing home price rose 4% last year, while the S&P CoreLogic Case-Shiller national index has shown slightly faster increases.

The top markets were Las Vegas, with flips making up 10.5% of all sales, followed by Daytona Beach, Fla., at 9%; Tampa, at 8.4%; and Memphis and Fresno, Calif., both at 8.2%.

“Investors are picking up their game after several years of flat or declining activity,” says Ralph McLaughlin, Trulia’s chief economist.

Why did home sales drop in December?

Home flipping was the rage during the mid-2000s' housing bubble, and it cooled during the crash. Home prices increased at a double-digit rate in 2013 and 2014 as the market recovered from the downturn, but credit was still tight, forcing many investors to make all-cash purchases and limiting flips, McLaughlin says. Last year, he says, price gains were more moderate but flipping picked up because mortgages were more readily available.

Trulia, in fact, found the correlation between rising prices and flipping was low-to-moderate in the 100 largest markets, compared to a high correlation in 2013 and 2014.

That means a larger share of investors are snapping up homes, making improvements and then selling them at a profit, rather than simply reaping the benefits of a price run-up, McLaughlin says. The result, he says, is improved housing stock.

In Las Vegas, for example, 11.6% of the houses flipped last year required a city permit for remodeling, the highest on records dating back to 2000, Trulia says.

That doesn’t mean house flipping is a net positive for the market. It creates more competition for average homebuyers, at least temporarily. And while it provides more upgraded homes for some shoppers, it reduces the stock for those who can afford only low-priced units and plan to make the improvements themselves.