Can flippers save the housing market?

In an attempt to breathe more life into the housing market, HUD is changing an FHA rule that prohibited insuring any home sold in fewer than 90 days. Officials hope the change will help rehabilitate distressed properties faster and raise home values.

The term "flipper" became a dirty word in the real-estate business just before the bubble burst. Now the federal government is turning to these quick-turnaround investors to pump some new life into the deflated housing market

At the beginning of February, the U.S. Department of Housing and Urban Development dropped — for a year — the Federal Housing Administration’s prohibition against insuring a home that had been owned by the seller for fewer than 90 days.

The idea is to “facilitate the return of repaired and habitable properties to the market in a timely fashion,” according to the announcement by HUD, and hopefully to lift real-estate values as these properties are sold.

A boon for the first-time homebuyer
“We’ve seen quite a bit of activity in the market on the part of first-time homebuyers,” says Paul Bishop, director of research for the National Association of Realtors. But, he says, many of the options are too “distressed” for many buyers to consider or lenders to finance. “This will give them an opportunity to purchase a nice home at a pretty reasonable price.”