Like viruses in a hard drive, these sales corrupt the entire market. Buyers, not realizing the flipped prices resulted from non-market sales, will mistakenly decide that prices for more invested properties should be higher. Over time, prices in the entire market move upward. When the flipped properties go to foreclosure, as they almost inevitably do, often all at once, prices plummet below actual market values until the excess supply is absorbed. If another owner has to sell at that time, they risk getting less than they owe on their mortgage.
Land flipping accelerates disinvestment.
Flippers pull value out of properties, not put investment dollars in. The instability caused by high foreclosures fractures the social fabric and ultimately lowers the actual values, not just the prices, for all properties in the immediate neighborhood. The risk for other owners of getting no return for improvements is often high enough to discourage other owners from significantly rehabbing their own houses. All You Need Is Fraud Healthy neighborhoods require rational housing markets where more valuable houses get higher prices than less valuable ones. In upper-income neighborhoods, real estate brokers and mortgage lenders insist everyone play by the rules so this happens.