Within the real estate industry, the term is used by investors to describe the process of buying, rehabbing, and selling properties for profit.
This resulted in an inflationary spiral until the bubble burst in 2008 and borrowing standards became stricter, leaving the housing market to bottom out.
"Rational" flipping can encourage a rejuvenation and restoration of a previously decrepit neighborhood, a process known as gentrification, which increases property values but can cause a population shift.
The renovated homes attract new populations and businesses to a region, encouraging more economic development; their higher assessed values brings more property tax revenue to local governments, allowing for more improvements and more policing.
When flipping occurs frequently in a community, the total cost of ownership can rise substantially, eventually forcing current residents to relocate, specifically poorer young and old people.
[citation needed] In response, many native Californians were forced to migrate to the less expensive areas of states such as Arizona, Nevada, Texas, Oregon and Washington.
The time requirement for owning a property was greater than 90 days between purchase and sale dates to qualify for FHA-insured mortgage financing.
Illegal property flipping often involves collusion between a real estate appraiser, a mortgage originator and a closing agent.
[10] In July 2012, business network CNBC green-lit several pilots for reality television series focusing on house flipping.