GlobeSt.com: How much does flipping contribute to rising home prices and unaffordability?

Blomquist: Somewhat similarly to foreclosures on the negative side of home-price appreciation, the market can absorb a certain level of flipping without that flipping causing prices to over-inflate and affordability to become a problem. A flipping rate of between 5% to 7%, which is where we are at now nationally, is a level of flipping that will not over-inflate the market. But in areas where 8% to 10% of home sales—or even higher in extreme cases—are home flips, we could be in dangerous territory where the market is being disproportionately impacted by these extraordinary sales. In the short term, these sales make the market look very good, but if they are not grounded in what most buyers in that market can afford, then the home flips are just building on a house of cards that will ultimately not be able to withstand any sort of shock.

GlobeSt.com: Is flipping more or less needed in areas where housing is scarce and affordability low?

Blomquist: The situation can vary from market to market and neighborhood to neighborhood, but generally speaking home flipping is not a good idea in these neighborhoods. From the perspective of the real estate investor, these neighborhoods are tough in which to find deals and therefore tough in which to make a profit. What is more likely needed in these neighborhoods is more infill type of development, where instead of a home being fixed up and re-sold, that home is torn down and its lot subdivided into four or five townhomes that are actually affordable.

The types of neighborhoods where flipping is most beneficial, both to the investors and to the end-buyers/renters, are neighborhoods that are still affordable but have a scarcity of homes that are in good condition that a first-time homebuyer or renter would be happy and proud in which to live in. The data in our report suggests flippers are migrating more to these types of neighborhoods, given that the age of homes flipped in 2016 was at a record high even while the square footage of homes flipped in 2016 was at a record low.

GlobeSt.com: What else should our readers take away from your report?

Blomquist: Providing streamlined financing to flippers using innovative technology is a nascent industry that has seen rapid growth over the last few years and likely will continue to see rapid growth in the next few years. Home flips in 2016 represent more than $38 billion worth of purchases by home flippers. Lenders financed $12 billion of this (32%), but certainly there is a lot more opportunity there for them to finance even if the number of home flips does not rise substantially in the next few years.

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IRVINE, CA—At the current level, house flipping is mostly good, but if we continue to see this upward trend for the next couple of years, we could easily be in dangerous territory for the housing market, ATTOM Data Solutions' SVP Daren Blomquist tells GlobeSt.com. As we recently reported, home flipping, including arms-length transfers in the for-sale apartment realm, hit a 10-year high in the year just past, according to the firm, who's 2016 Year-End US Home Flipping Report shows that 193,009 single-family homes and residential condominiums were flipped in '16. That's up 3.1% from 2015 and represents the highest level since 2006, when 276,067 single-family homes and condos were sold for the second time within a 12-month period.

We spoke with Blomquist about home flipping's impact on the housing market, including prices, affordability and availability of homes for sale.

GlobeSt.com: Do you believe home flipping is ultimately good or bad for the housing industry as a whole?

Blomquist: Home flipping is good in moderation. At the current level, it's mostly good, helping to provide inventory of housing to both owner-occupants and renters (via real estate investors buying turnkey rental properties from flippers) that those buyers and renters are hard-pressed to find elsewhere in the market. However, if we continue to see this upward trend for the next couple of years we could easily be in dangerous territory for the housing market, where home flipping becomes purely speculative with no actual value added to the properties being flipped, both a symptom of and contributing to over-inflated home-price appreciation.

GlobeSt.com: How much does flipping contribute to rising home prices and unaffordability?

Blomquist: Somewhat similarly to foreclosures on the negative side of home-price appreciation, the market can absorb a certain level of flipping without that flipping causing prices to over-inflate and affordability to become a problem. A flipping rate of between 5% to 7%, which is where we are at now nationally, is a level of flipping that will not over-inflate the market. But in areas where 8% to 10% of home sales—or even higher in extreme cases—are home flips, we could be in dangerous territory where the market is being disproportionately impacted by these extraordinary sales. In the short term, these sales make the market look very good, but if they are not grounded in what most buyers in that market can afford, then the home flips are just building on a house of cards that will ultimately not be able to withstand any sort of shock.

GlobeSt.com: Is flipping more or less needed in areas where housing is scarce and affordability low?

Blomquist: The situation can vary from market to market and neighborhood to neighborhood, but generally speaking home flipping is not a good idea in these neighborhoods. From the perspective of the real estate investor, these neighborhoods are tough in which to find deals and therefore tough in which to make a profit. What is more likely needed in these neighborhoods is more infill type of development, where instead of a home being fixed up and re-sold, that home is torn down and its lot subdivided into four or five townhomes that are actually affordable.

The types of neighborhoods where flipping is most beneficial, both to the investors and to the end-buyers/renters, are neighborhoods that are still affordable but have a scarcity of homes that are in good condition that a first-time homebuyer or renter would be happy and proud in which to live in. The data in our report suggests flippers are migrating more to these types of neighborhoods, given that the age of homes flipped in 2016 was at a record high even while the square footage of homes flipped in 2016 was at a record low.

GlobeSt.com: What else should our readers take away from your report?

Blomquist: Providing streamlined financing to flippers using innovative technology is a nascent industry that has seen rapid growth over the last few years and likely will continue to see rapid growth in the next few years. Home flips in 2016 represent more than $38 billion worth of purchases by home flippers. Lenders financed $12 billion of this (32%), but certainly there is a lot more opportunity there for them to finance even if the number of home flips does not rise substantially in the next few years.