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Don't Try This at Home: New Book on Flipping Bodes Ill for Real Estate

This may not be a sign of an impending apocalypse, but it sure isn't a good omen: Someone named Jim Ingersoll has written a book called "Investing Now" that offers "easy advice on how to flip houses in today's real estate market."

Flipping - buying a property with mostly borrowed money, sprucing it up and selling it quickly - became a popular pastime in the early 1990s, when credit was plentiful and cheap and real estate prices kept rising. It worked like a charm until 2005, when prices began one of their worst collapses in history, losing about 30 percent nationwide before they bottomed out in early 2009.

Or did they? After stabilizing for several months, prices have turned back down lately and are close to making fresh lows. Robert Shiller, a Yale economist considered an authority on the real estate market, recently warned of "a substantial risk of home prices falling another 15 percent, 20 percent or 25 percent."

Shiller's analysis is always worth heeding, and the appearance of Ingersoll's book, whatever the merits of his methods may be, should be another source of concern if you're a homeowner. If you're mulling over getting into the flipping business, you should be exceedingly leery.

A truism of contrarian investment philosophy is that bullish cultural phenomena like books and magazine covers tend to occur close to tops in markets and bearish ones occur near bottoms. The book heralding "Dow 36,000" was published just in time for the tech stock crash in 2000 ("Dow 6,000" would have been a far more accurate and prescient title), and numerous works with titles like "How to Survive the Coming Crash" hit shelves in the early 1980s, when one of the greatest bull markets and economic booms was around the corner.

The disaster that continues to befall the housing market should have banished thoughts of flipping among the masses for generations to come. That the practice is being presented again as a pathway to riches indicates that real estate prices are not as close to a bottom as many homeowners and investors might hope.

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