Paulson, speaking at CNBC’s Delivering Alpha conference, said he is still high on housing.

“It’s not too late to get involved. I still think buying a home is the best investment any individual can make. Affordability is still at an all-time high,” said Paulson.

Large-scale investors, however, may not be behind the surge in home flipping. They may, in fact, be the cause of it.

“Now that the institutional investors are doing buy and hold, a lot of these guys [individual investors] can’t compete with their checkbooks,” said Rick Sharga, formerly an executive at Carrington who now works for Auction.com. “In some cases the individual investors are flipping them to the institutional investors.”

While many of the large funds have teams that renovate homes, in some cases they would rather pay a premium for a move-in-ready property, rather than waste time and money remodeling.

“So the flippers are kind of the in-between middleman who is getting the property into good rentable condition and then selling to the institutional investors,” explained Blomquist.

(Read more: Map: Tracking the US real estate recovery)

Article source: http://www.cnbc.com/id/100896253