Return of the House Flipper! Return of the Car Lease! Return of Rent-to-Own!

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Also: Return of the shopper who is up for dropping some disposable income on jewelry, shoes, and cars. Haven’t we seen all of this before? What’s old—and good for the economy, but probably unwise for the consumer—is apparently new again.
BusinessWeek recently reported increased sightings of a breed of investor that had sensibly disappeared for a while, the house flipper:

Improbable as it sounds, house flipping—that hallmark of American real estate mania—is making a comeback. All around the country, but especially in some of the regions hit hardest by the housing slump, investors are swooping in on distressed properties and banging them into shape for sale to first-time home buyers, vacation-home seekers, and people looking for rental income. In Phoenix last year, the number of foreclosed homes that changed hands within six months of being purchased—the best statistical measure of flipping activity—increased 81% from the previous year, to 4,661, according to RealtyTrac, which compiles foreclosure data. Las Vegas flips rose 38%, to 8,042, in 2009; in Riverside and San Bernardino counties in California, they climbed 45%, to 17,203; in the Cape Coral (Fla.) area, flips almost tripled.

Kiplinger discusses the expected resurgence of car leases this year:

Of the more than 12 million new cars that will be sold this year, about one-fifth will be leased. That compares with about 17% before the bottom fell out of the American auto market in 2008 and 2009. In fact, three-fifths of the total increase in new-car sales this year will come from lease transactions.

The Chicago Tribune says that a tough, unpredictable real estate market—not to mention the tough, unpredictable economy and the tough, unpredictable job market—has made rent-to-own agreements attractive to renters and sellers alike:

Rent-to-buy “is definitely growing,” said John McIlwain, senior resident fellow at the Urban Land Institute, a nonprofit education and research organization.

“A number of sellers, particularly developers, are turning to that” to fill unsold and unoccupied units in the slow home market, he said.

Rent-to-own traditionally has been used by buyers with limited means to purchase a home. But the collapse in U.S. housing sales in recent years has produced a new rent-to-buy iteration, McIlwain said. Sellers of higher-priced homes and resort properties are willing to woo skittish buyers with rent-to-buy programs to provide cash flow now and, hopefully, lock in future buyers.

Finally, The NY Times cites data indicating that consumer spending is back in a big way: Last month, sales of luxury goods and home furnishings, for example, were up 22.7% and 13.8%, respectively, compared to March 2009. The panic that turned the average consumer into a hoarder willing to get by with whatever was already in their closet and whatever was on a fast-food restaurant’s dollar menu has apparently passed. Now, like bears emerging from hibernation, the shoppers have woken up, and they’re hungry once again for stuff—which bodes well for the economy, though obviously not the shoppers’ savings accounts:

After months of penny-pinching amid the recession, new figures — showing an improving job market, rising factory output and increased retail sales — suggest that consumers are no longer restricting their budgets to necessities like food and medicine. They are starting to buy clothes, jewelry and even cars again…

After the financial crisis hit in late 2008, consumers retrenched heavily. And in the months that followed, there were fears that newly frugal Americans would increase their savings so much there was no hope that consumer spending could be a factor in a recovery.

That was a troubling prospect because consumers have been the drivers of economic growth after past recessions. After all, their spending accounts for more than two-thirds of all economic activity in the United States.

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