Flippers Ride Housing Wave

Post Reply
Hanna
Posts: 2766
Joined: Sun Oct 15, 2006 8:11 pm

Flippers Ride Housing Wave

Post by Hanna » Tue May 28, 2013 8:23 pm

(snip)

While flipping is re-emerging nationwide, brokers say it is happening most in California, where home prices have risen sharply over the past year. Six of the 10 largest price gains in major U.S. cities over the past year have been in California, according to Zillow. In April, home values rose by 25% from a year earlier in San Jose, San Francisco and Sacramento, and by 18% in Los Angeles.

(snip)

The industry is split over whether the current flipping activity could lead to potential problems. Jed Kolko, chief economist and a vice president at Trulia Inc., an online real-estate site, says the current activity isn't indicative of a bubble. "A bubble is when prices are rising fast from high levels," he said. "We're not there now." Today's flippers are stronger financially. Flipping homes requires lots of cash because banks aren't making loans to investors who don't have large down payments. While some investors have bought many homes that can be rented out, it usually isn't feasible financially to rent out more expensive properties.

Another big difference: Many investors are buying and fixing up neglected homes, including foreclosures, that ordinary buyers might not have the cash or the patience to tackle. For their part, flippers say they are doing the market a service and are buying homes overlooked by others, either because they need repairs or because they aren't widely marketed. But some real-estate agents are raising concerns that investors are taking advantage of tight supplies.

Competition for homes "is reaching bubble proportions, and I'm very wary of it," said Rich Worcester, a real-estate agent in San Diego who flipped about 25 homes last year for himself and clients. Mr. Worcester is representing a colleague who paid $675,000 last month for a foreclosed three-bedroom home in San Gabriel, a Los Angeles suburb. After installing new appliances, relandscaping and staging the empty house with furnishings, it hit the market for $867,000 earlier this month. Mr. Worcester said it hasn't yet received any offers, and he conceded he may cut the price.

Investors generally make all-cash payments, which gives them an extra advantage over buyers who must complete a lengthy mortgage-approval and home-appraisal process. Robert Ganem beat out four other offers this year when he paid $600,000 for a short sale—in which a home is sold for less than the amount owed on its mortgage—in Ladera Ranch, in southern Orange County. He made cosmetic renovations—fresh paint, new hardwood floors and kitchen tiles—before selling it a few weeks later for $755,000.

(snip)

Meanwhile, the growing competition from investors is unwelcome news for ordinary buyers. After waiting years for prices to hit bottom, "buyers are jumping in before prices bounce so high they can't afford it," said Christine Donovan, a real-estate agent in Costa Mesa, Calif.

(snip)

http://online.wsj.com/article/SB1000142 ... 13974.html

(if you cannot open by clicking, copy and paste the title onto google)

User avatar
Fordama
Posts: 18139
Joined: Sun Oct 15, 2006 3:12 pm

Re: Flippers Ride Housing Wave

Post by Fordama » Tue May 28, 2013 8:33 pm

We bought in '09, and even then we were getting beat to houses by flippers.

Fordama
This country of the United States was not built by those who waited and rested and wished to look behind them.---JFK

User avatar
John Q. Public
Site Admin
Posts: 19527
Joined: Mon Oct 02, 2006 5:56 am
Has thanked: 1 time
Been thanked: 2 times

Re: Flippers Ride Housing Wave

Post by John Q. Public » Tue May 28, 2013 10:50 pm

The biggest thing driving the market right now is rents. ~$1900 - $2100 for a 2-bedroom. So people who are just looking for a place to live are having to outbid investors/landlords. Or they're having to offer enough to convince a landlord to sell. Sellers know that and are holding out for the better offers from actual home buyers, which makes the investors raise their offers, which makes the actual home buyers raise theirs, and on and on.
Don't look at me, I just work here.

User avatar
Parrotpaul
Posts: 33550
Joined: Sun Oct 15, 2006 2:14 pm

Re: Flippers Ride Housing Wave

Post by Parrotpaul » Wed May 29, 2013 8:34 am

LWV is an excepotion....prices and rents are still quite low.
"I think I may say that of all the men we meet with, nine parts of ten are what they are, good or evil, useful or not, by their education." John Locke

Post Reply