Widely associated with the housing bubble. In fact, a new report today from realtytrac shows the number of active home flippers last year was the highest in nearly a decade. And as diana olick reports, the number is growing, and that, to some, is concerning. This is where we are. House flipper, sasha, is doubling the size of this northeast d. C. Home, hoping to double potential returns in a Housing Market where prices are heating up. I dont know if theyre overinflated, but theyre really high. I dont think ive seen them this high in quite a while. This was the original house. Rising prices are luring flippers back in the door of a fastpaced renovation game that all but disappeared during the great recession. Active flippers are now at the highest levels since 2007, close to 180,000 Single Family homes and condos were flipped in 2015, according to realtytrac. That is, bought and sold in the same year. Flips made up 5. 5 of all sales last year, the first increase in four years. I think its incredibly saturated, honestly. There have been a lot of people who are getting into this business, because they have seen it as a safe place to put their money. And the profits are growing, as well. Homes flipped in 2015 yielded an average gross profit of 55,000, nationwide, the highest since 2005. Investors are seeing top returns in pittsburgh, new orleans, philadelphia, cincinnati and new haven, connecticut. Nationally, returns are close to 46 , up from 35 in 2005, when flipping was at its peak. House flipping today is nothing like it was during the last housing boom, when flippers were putting no money down and using easy credit. Today, even with investor loans, they have to have some skin in the game. That said, flipping can artificially inflate home prices. And it can be a sign that prices are already too hot, because Everyone Wants to get in on the potential profits. The market is becoming overvalued, but were not in a bubble. If we look at the differences between today and the mid 2000s, it was driven by speculative activity. Lots of high leverage, and equity extraction. Most of those factors are not there today. The leverage may not be there, but the speculators are. Flippers are back, and buying. For nightly Business Report, im diana olick in washington. Lets turn now to Michelle Meier for more discussion about the u. S. Housing market in broad context. And then flipping in particular. Shes an economist with bank of america, merrill lynch. Welcome. Good to have you with us, michelle. Good to be here. What do you think of this flipping phenomenon . Are you seeing it . How worrisome is it . What . Well, i think it is a sign that home prices have recovered, and that housing has become an asset class again. So you have seen Greater Investor participation, and you have seen expectations start to shift around how people perceive housing. But my impression, even though its at the highest in a decade, think about what the last decade has looked like. It was really recovering from a huge bubble. So the fact that its the highest since 2007 makes sense, because we had a period of extreme weakness in the Housing Market. So by itself, i dont think the numbers are that worrisome. But i think it is reflective of the fact that home prices have recovered, and that people are starting to think about housing differently. And how do they think of housing now . You said an asset class. We havent seen that in some time. And inventory is very tight. We havent. So i think theres a number of factors that have supported housing. On the one hand, i think the fact that rates are so low for investors, its become that asset class, because of the push for more risk, the push to find more yields and home prices rising at a Pretty Healthy pace. And the fundamental side, i think the fact that inventory is low and has remained fairly consistently low through the cycle has helped to support home prices, as well. And finally, were in a very low Interest Rate environment, which is not only supporting those investors, but those are going to support potential homeowners. So even though home prices have increased, the fact that Interest Rates remain low, its making it affordable. Lets talk a little bit about i just implicit in what you just said is, i guess, a prediction that house prices are going to remain healthy and rising in most markets this year. Where you have low inventory, low supply, and a pretty cheap cost of money. I think thats right. I would expect some price appreciation to continue. That said, i think if you take a mediumterm perspective, so look at the next five years or so, well be entering an environment where home prices are overvalued relative to disposal income. So it will start to turn into a situation that if you dont continue to have this abnormally low Interest Rate and or you dont have strong economic performance, home price appreciation may not be able to continue at its current pace. So i think this year, yes, the backdrop still seems favorable for home prices but over the medium term, i would suggest more caution. And what about the fed . If the fed does raise Interest Rates one or more times this year, as they have said they would, thats certainly in play. What difference does that make to housing . Well, i think the feds normalization process is so slow, and its so careful in the sense that theyre trying to avoid a scenario where you get this unruly increase in Interest Rates. And look at what happened after the hike in december right after the rate hike, the tenyear peak that has been falling essentially ever since in terms of rates. So i think, yes, we do anticipate that the fed will hike. But i think its going to be framed in a way where it still suggests a decent amount of accommodations so i dont expect a recent shock higher. Michelle, thank you very much. Michelle meyer, a very nice economist with merrill lynch. Head to our website, nbr. Com. Orders to u. S. Factories increased in january by the most in seven months. The Commerce Department reported a rise of more than 1. 5 during the first month of the year. Within that report, a key category that tracks Business Investment plans rose by the largest amount in 19 months. And separately, the u. S. Economy Services Sector expanded in february, but the rate of expansion was slower than the previous month. The institute for supply management reported a decline in employment for that sector for the first time in two years. The number of americans filing for Unemployment Benefits unexpectedly rose just a bit last week. Initial claims for state Unemployment Benefits increased 6,000 to a seasonally adjusted 278,000. That is still, though, a level consistent with a strengthening labor market. The jobless claims report comes one day before the governments Monthly Employment report and expectations there are foror nonfarm payrolls to rise 200,000 and unemployment at 4. 9 and average Hourly Earnings are expected to increase fracnally. Stocks squeezed out gains, boasting a Third Straight day of gains, in fact, one day before the Monthly Employment report. Many investors likely reluctant to make big moves ahead of that release. However, gains, however small, helped the major averages close at their highest levels since early january. And by the close, the Dow Jones Industrial average rose 44 points to 16,943. Nasdaq gained 4 and the s p 500 added nearly 7. As for oil, prices fell slightly to settle at 34. 57 a barrel. Prices are higher in recent weeks, but still historically low and starting to pressure a part of the Energy Market once considered lowrisk infrastructure companies. They were in theory less exposed to commodity price swings. And were insulated by longterm contracts. As Morgan Brennan reports, that may be about to change. As more ex poreration and reduction companies file for bankruptcy, its putting pressure on what had been considered a low risk sector, pipeline. Four dozen oil and Gas Producers filed last year and if low prices persist, more could follow suit. Thats pg ripple effects on Midstream Companies that build and operate the infrastructure to gather and transport those Producers Oil and gas. Midstream companies lock in longterm agreements that have, until now, been considered bankruptcyproof. But that could change as soon as next week when several rulings potentially come down the gasgathering contracts are unique in that the producer dedicates all of his future production from the subject leases to the gas, to the particular gas gather under the gas contract. And that dedication is the rub here in all these bankruptcies as to whether or not the dedication is merely a contractual obligation, a personal right, or if it contracts a covenant. Oil and gas is requesting a Bankruptcy Court reject deals with two pipeline operators, which the judge has said show is inclined to do. And tomorrow a delaware Bankruptcy Court hears arguments regarding quicksilver energys agreements with questwood equity partners. Quicksilvers 245 million deal to sell its assets depends on avoiding those pipeline contracts. If the courts rule in the producers favor that could set a precedent for other contracts to be voided. Though much would depend on each state and details on each agreement. Still, analysts worry if there are more bankruptcies. Not only triggering defaults on contract that may ultimately get voided but throwing the entire midstream Business Model into question. For nightly Business Report, im Morgan Brennan. Still ahead, a new Analysis Shows who would carry the cost of Hillary Clintons proposed tax plan. Tech companies are uniting with apple, the iphone used by one of the San Bernardino shooters. As of this afternoon, internet companies, twitter, air b and b and 13 others have filed legal briefs in support of apple. At t also filed a brief. Google parental fabet, facebook and others are expected to file similar briefs before todays deadline. A new analysis of Hillary Clintons tax plan finds that most of the tax burden will fall on the countrys highest earners, according to a Bipartisan Panel of reviewers at the tax policy center. The tax plan will raise taxes on the 1 by an average of 78,000, while leaving taxes for the rest of america largely unchanged. But how does clintons tax plan compare to Donald Trumps . And what will it mean for you . Here to talk more about the leading candidates tax plan is howard glekman, senior fellow at the tax policy center. Welcome, howard. Nice to have you here. Good to be here. Lets start, first of all, with ms. Clintons tax plan. It leaves a large swath of the population with an unchanged tax plan, but in terms of boosting federal revenues, how much would it bring in . Well, raises revenues by about 1 trillion over ten years. And her goal is to help finance a number of social programs, kind of kind of table sobel programs, help with college education, help with health care, caring for aging parents, that sort of thing. Does her plan reduce the federal deficit . It would. We think by about 1 trillion. Over ten years. Now she has said she may have some additional tax cuts for low and middle income households. If she does, that will lead up some of that deficit reducing potential. In terms of mr. Trumps plan, how does it compare . Its almost the mirror image. Donald trump is proposing 10 trillion in tax cuts over ten years. And the goal there is to reduce taxes on highincome people. Actually, on everybody, but mostly on highincome people. To grow the economy. So its in some sense mrs. Clinton is proposing kind of a Traditional Democratic plan. And mr. Trump is proposing a traditional republican plan, except his is much, much bigger than anything we have ever seen before. You say that the top you said ms. Clinton, the top 1 of filers would pay three quarters of the extra tax. The top 1 10 of 1 would pay more than half the tax increase under clinton. Under trump, who gets the biggest tax cuts . Top 1 would get half the tax cut. So its, again, almost the mirror image. Its skewed very heavily towards highincome people. Now with the trump plan, everybody gets some tax cut. But for people at the bottom, middle income people, its a few hundred or maybe a few thousand dollars. For people at the very top, people in the top 1 10 of a percent, they get a tax cut of 1. 3 million a year. So the impact of mr. Trumps plan we asked you about ms. Clinton. Mr. Trumps plan on the deficit. It would be enormous. It would increase the deficit over ten years by almost 10 trillion. And that doesnt even count the added interest expense that the government would have to pay to finance that extra debt. Very quickly enormous tax cut. As you looked at mr. Trumps plan, did you use what is known as dynamic scoring to look at whether, as he would claim, the tax cut would reduce would result in much greater economic output and therefore offset some of that revenue loss . We dont do dynamic scoring at the tax policy center. But its important to know that most economists would agree that if you raise the deficit by that much money, by 10 trillion, youre likely to get much higher Interest Rates. And the Interest Rate effects would swap the incentives to save and invest and work that would come from the tax cuts. So unless mr. Trump is going to tell us how it is hes going to pay for these giant tax cuts, i think even a dynamic score would show that the whole proposal would either not affect the economy at all, or more likely, would actually hurt the economy in the long run. Interesting. Very interesting study. Thank you, howard. Nice to have you with us. Howard glekman with the tax center policy. Mitt romney took direct aim at Donald TrumpsBusiness Record today. His Foreign Policy plans and his economic ideas. In a speech designed to rally opposition to the republican front runner, the gops 2012 nominee said trumps proposals would cause a prolonged recession. His proposed 35 tarifflike penalties would instigate a trade war, and that would raise prices for consumers. Kill our export jobs. And lead entrepreneurs and businesses of all stripes to flee america. His tax plan in combination with his refusal to reform entitlements and to honestly address spending would balloon the deficit and the national debt. Trump answered romneys indictment by calling him, quote, a choke artist, among other things. He said about trade, we have to keep trade. Nobody knows more about trade than me. I made so much more money than mitt. You know, i have a store thats worth more money than mitt. Its a store. The back and forth comes ahead of a number of caucuses and primaries this saturday in a debate tonight. The super bowl in february hurts krogers sales. That is where we begin tonights market focus. The sprrkt chain reported weaker than expected sales, blaming warmer weather and the super bowl being played in february. The company says the week leading up to the game is traditionally a strong one for sales, and kroger Quarter Ended january 30th. Ceo mike slotman said profits will be affected by one factor in particular. The low end of our guidance is slightly below our 8 to 11 longterm growth rate. Thats purely driven by where fuel may or may not go in 2016. If fuel migrates, we may at the at the low end. If its like it was the last couple years, we could be at the mid point or high end of that. Shares fell to 37. 80. Herbalife, the seller of Nutritional Supplements inaccurated stated its membership growth 28 times last year, attributing the inaccuracies to database scripting errors. The company both overstated and understated new member numbers. Herbalife shares fell 70 to 5242. Ciena shares plummeted after missed revenue targets and lowered outlook for the year. The company attributed the down beat forecast to Global Economic challenges. Ciena shares were off 18 to 16. 99. And costco, the Discount Warehouse change, said its profit dropped 9 but store sales rose for the first time in a year. The company also said it will increase its minimum wage by 1. 50. This will be the companys first wage increase in nine years. Costco said that wage hike will lower earnings for the current and next three quarters. Shares were off just a fraction to 151. 60. Samson right is acquiring toomey holdings. The wall street journal said the deal could be valued at 2 billion, and a carryon that will fit under the seat in front of you. Shares jumped to 26. 20. Barnes and noble said same store sales for the quarter rose more than a percent, lifted by purchases of nonbook merchandise. The bookstore chain said it plans to close eight stores this year but will open four new prototypes by april 2017. Shares were up to 10. 94. And navistar suggested the company is open to potential deals. The truck manufacturer could be in acquisition target or a partner with another company. Shares surged 17 on the day to 10. 84. And the Mining Equipment maker, joy global, reported a worse than expected loss for the quarter, but did not cut its outlook for the year. The Company Plans to sell off additional plants and machinery shares up 20 to 16. 09. Well, winter is almost over, and Southern California has seen little rain so far, despite forecasts that el nino would usher in a wet winter season. So why were the forecasts so off . And what does another year of drought mean economically . Jane wells is on the case. This is what lake orville looked like a little over a year ago. Water levels very low. Levels this week at the lake, which is one of californias most important reservoirs, dont look much different. El nino has been el dudo. Nasa climate scientologists had high hopes. He was expecting what a colleague predicted would be the, quote, godzilla of el ninos. Well, it kind of was. Everywhere in the world but california. The rainy season here had a promising start. In just one 24hour period in january, you could see the storm channels fill up in los angeles and up in the sierra once dry ground was covered with an abundance of snow. And then the rain stopped. February was the hottest on record. What went wrong . Yogi berra said that predictions are hard to make,able suspect about the future. And predicting the weather is hard, especially hard with el nino, since they only roll around once every 10 or 15 years. So we have really only seen two big el ninos since we have had our big observing systems that look really hard at what it does. That means we have only had a few chances to get it wrong. And we need a few more before we start getting it right. Willis says this el nino pushed warm water further north, which could mean as it fades, Southern California could get more rain. In fact, a series of storms are expected there this weekend. Theres still time. So dont put those galoshes into deep storage yet. We could still get some rain in march and april. Enough to end the drought . Well, given that the u. S. Drought map of california looked like this a year ago, and looks about the same today, the golden state may need 40 days and 40 nights of rain, and its been a very long time since anyone predicted that. For nightly Business Report, jane wells, los angeles. Beautiful country. Still ahead, what cadillac is doing to up its game in the highly competitive luxury auto market. As auto sales climb to alltime highs, American Consumers are setting records when it comes to how theyre paying for those new cars. According to experian, automotive leasing in the Fourth Quarter was higher than ever with almost 30 of all vehicles bought in showrooms being financed through a lease. That compares to about 25 in the prior year quarter. Consumers are drawn to the lower Monthly Payment that comes with leasing when compared to a traditional auto loan. Cadillac is looking to reassert itself in the battle for luxury auto buyers after years of watching competitors rack up stronger sales because of a slew of suvs and crossovers, cadillac is now trying to up its game with a new model. Phil lebeau reports from dana point, california. For cadillac, x marks the spot, as in the xt5. The brands newest model designed to make luxury buyers think once again about buying a caddy. Im proud to say that cadillac brand today is absolutely resurgent. And we are on a mission to take this brand back to what i like to call the pinnacle of premium. This is the new cadillac xt5, a mid size suv. Why is this so important for General Motors and for cadillac . Mainly because cadillac has not been very competitive when it comes to luxury suvs. From lexus to bmw to mercedes, suvs now drive the luxury auto market. In fact, its one reason bmw and mercedes have outsold cadillac since the recession seven years ago. The market for suvs was really strong, it was growing, everybody saw it. And they havent addressed it. The srx is way long in the tooth, way overdue for being replaced. They also have some voids. They need a smaller Sport Utility vehicle, so they have got to start introducing a lot of new product and keep it very fresh. Lighter and quieter, with a refined interior, packing an array of tech features, the xt5 is the first of a wave of new models coming from cadillac. And the president of the brand knows every one has to be spoton for caddy to make a comeback. Its like a boxing match. You cant win the fight by landing one heavy blow per round. You need knockout punch after knockoutut punch. The xt5 rolls into daddy showrooms in april. And with it, the hopes of a brand looking to make a splash with luxury suv buyers. Phil lebeau, nightly Business Report, cane point, california. And final tonight, treasure discovered in an old bag almost mistaken for trash. A family recently found seven vintage baseball cards in a crumpled paper bag inside the house of their deceased great grandfather. The cards produced in the early 1900s that collectors call the monster are expected to be worth well into the seven figures. Previously, only 15 cards were known to exist. Its unclear what the family, which wishes to remain anonymous, will do with them. You see they call them the lucky seven kind. Im going back to my box at home and look. Take a look at that, yeah. Good luck. All right. That does it for nightly Business Report for tonight. Im sue herera. Thanks for joining us. Im tyler mathisen. Thanks from me, as well. Have a good evening, everybody. Well see you back here tomorrow night, jobs friday. [male 1] we are on a roadtrip. [female 1] to stop off at different cities. [male 2] and talk to inspiring people. [female 3] i never thought of going into music as an entertainer. It was just sometg that was always around. [harmonica noise] [male 1] this is the only time since high school that i can sit down and reflect on how i actually feel about things. [male 3] opening the film center, we give a message of just really believg in yourself and believing in your power to create things of beauty. [female narrator 1] roadtrip nation would like to thank the College Board for supporting this series. The College Board connect to college success. [male narrator 1] this Public Television series is supported by the university of phoenix foundation. Helping roadtrip nation build hope, discovery, and Educational Opportunities in school communities