There are higher-end flippers – this one paid $940,000:
Category Archive: ‘Flips’
NEW YORK — Blackstone Group LP, which has spent $5 billion to acquire almost 30,000 U.S. single-family houses, is nearing the later stages of its buying as home prices jump, said Jonathan Gray, the firm’s global head of real estate.
The market has become more “challenging” as competitors enter the business of buying homes to rent out, Gray said Monday.
Blackstone (NYSE: BX), based in New York, has acquired houses in 13 metropolitan areas and is continuing to make purchases, he said.
“For our type of capital and the returns we hope to generate, my guess is we’re in the later stages of this,” Gray said. “That does not mean the housing recovery itself will not continue for a number of years.”
Blackstone is the largest of the private-equity companies taking advantage of the foreclosure crisis to build portfolios of single-family homes to rent, helping to diminish supply and drive up real estate values in some areas.
U.S. home prices jumped 10.9 percent in March, the most in seven years, according to the S&P/Case-Shiller index of 20 cities.
Blackstone’s purchases represent a fraction of the U.S. housing market and rebounding prices are the result of basic supply and demand,
Gray said. U.S. population growth has outstripped homebuilding because property prices aren’t high enough to spur new construction, creating a shortage, he said.
“There are about 150 million homes in the United States,” Gray said. “We own about 29,000. In the last year, there were 5.6 million homes bought and sold. Of those, we were 24,000. We are a very small percentage.”
The housing recovery is “midstream,” with the eastern part of the U.S. representing good value, Gray said.
National prices are still down about 28 percent from the 2006 peak, according to the Case-Shiller index.
Hat tip to SD Squatter for sending in this article from the wsj.com:
LADERA RANCH, Calif.—Rising home prices have fueled the return of a practice that some blamed for inflating the bubble: house flipping.
In California, the number of homes sold in recent months that had been flipped—or bought and resold within six months—has reached the highest levels since late 2005, according to PropertyRadar, a real-estate data firm. About 6,000 homes have been flipped in the state this year through April, or more than 5% of all homes sold statewide.
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.
“When prices rise, this trade works. It’s not anything more sophisticated than that,” said Christopher Thornberg, an economist with Beacon Economics in Los Angeles.
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.”
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.
“A year ago, I couldn’t give them away. I was definitely swimming against the current,” said Mr. Ganem, who said he flipped 20 houses last year, double the previous year. Before he became a full-time real-estate investor, Mr. Ganem worked as a mortgage broker in Los Angeles. Flippers get a “bad rap” in the public eye, he said. “Most buyers want a home that’s move-in ready. We come in and make repairs that a bank or an underwater owner is not going to do.”
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.
Parviz Goshtasby, who moved to Southern California three years ago, is finding few homes available to entry-level buyers in Newport Beach, where starter homes can begin at $800,000. “I slowly realized that I can’t compete with these investors,” said Dr. Goshtasby, a plastic surgeon.
After three unsuccessful offers, he agreed to pay $1.6 million for a home in January after the seller agreed to finance a 10% second-lien mortgage, but the deal fell through when the seller later got cold feet. Two weeks ago, he offered to pay the $1.2 million asking price on another home that ended up selling to a cash buyer.
The downstairs room is off by itself (it was rented out separately by the previous owner), so this is feels more like a 1,500 sf one-level home:
You saw the previous flipper video where he is hoping to make a million?
He has a track record – right around the corner too:
This will be the next indicator for Starboard sellers in La Costa Oaks:
SP was $851,500.
Flippers asking almost $5,000,000 extra because they fixed the leaks – from the latimes:
Rihanna took a financial hit last year when she sold her water-damaged home in Beverly Crest.
Now an industrious flipper is trying to make back some of the millions the pop star lost and has listed the newly improved place at $9.95 million.
The multiple Grammy Award winner paid $6.9 million for the property in 2009 and sold it two years later for $5.03 million. When listed then, the gated house was described as a “major fixer” with “extensive damage from moisture and water.” But that’s all water under the bridge now.
The 8,520-square-foot contemporary and a swimming pool sit on about three-quarters of an acre with unobstructed canyon and city views. Details include a custom closet with suede ceilings in the master suite, tiered seating in the home theater and 35-foot-high tongue-and-groove wood ceilings in the open-plan living space. There are three fireplaces, a bar, a library/study den, seven bedrooms and nine bathrooms.
Rihanna, 23, is one of the world’s top-selling recording artists. Her earnings between May 2011 and May 2012 were estimated by Forbes at $53 million.
Update – a big price reduction, now down to only $8,395,000:
What a week of flippers!
The hits just keep on coming! They did add a garage.