In areas with fewer new-home tracts, the flippers are helping to fill the void by providing a like-new product – expect them to stick around!
The Valley of the Sun looks like the flipping capital of the USA, but considering the population differences, Douglas County has about 5x more flips per person.
The list of counties with the most flips over the last year (April to March):
Hat tip to reader Just Some Guy for sending in this article:
With home values recovering from the Great Recession and the fix-and-flip market drying up, what’s a real-estate investor to do?
In Southern California, American Coastal Properties is going for the high end.
Instead of focusing on buying bank-owned homes from auction, fixing them and selling them for a gain, the five-partner group formed in 2012 buys older homes in affluent areas like La Jolla, Del Mar and Solana Beach, guts them, adds square footage and hopes to sell them for a gain. It’s a risky business that can reap hundreds of thousands of dollars in rewards, but also can bring unwelcome surprises that take a chunk out of any profit.
The MLS shows that 11% of the 1Q14 residential sales in SD County were REO and short sales, and this article shows 7.1% flips (hat tip to SD Squatter):
Realty Trac, the nation’s leading source for comprehensive housing data, today released its Q1 2014 U.S. Home Flipping Report, which shows 3.7 percent of all U.S. single family home sales were flips — where a home is purchased and subsequently sold again within six months — in the first quarter of 2014, down from 4.1 percent in the fourth quarter of 2013 and down from 6.5 percent in the first quarter of 2013.
Among metro areas with a population of at least 1 million and at least 25 single family homes flipped in the first quarter, those with the highest share of flips in the first quarter were New York (10.2 percent), Jacksonville, Fla., (10.0 percent), San Diego (7.1 percent), Las Vegas (6.7 percent) and Miami (5.9 percent).
Eighty-two percent of all properties flipped in the first quarter were sold to owner-occupants; 18 percent to buyers with a different mailing address than the property. Forty-three percent of all properties flipped in the first quarter were all-cash sales to the new buyer.
How is your sense of value? Can you correctly guess the list price of a home after a three-minute tour? I have t-shirts for those who guess the LP.
Extra note on the video: You’ll hear me say ‘bathroom’ when discussing the deconstruction. The garage used to be its own living unit, with bathroom and kitchen – these owners took it out and made it back into a garage.
Richard just uploaded his new La Costa listing this morning at 8:45am, and three offers are already in hand. It’s going to be a wild 2014!
This typifies today’s flipper – get a deal on a lazy short-sale, add lipstick, boast of the improvements (“completely remodeled from top to bottom’), and shoot for outrageous profit. What a country!
This had been on the MLS for less than 24 hours when I went by around lunchtime today, and people were already all over it. Compared to the rest of the recent offerings around La Jolla, it looks like a deal:
In areas where the inventory is close to zero, add the basic flipper package and stand by for offers:
These sellers paid $500,000 in February.
Doomers have claimed that since rates went up, investors are fleeing the market. Thankfully Alejandro of the latimes.com looked into it a bit deeper to find that there are plenty of investors, but it’s finding the deals that is the challenge – an excerpt:
Now the foreclosed homes in those markets are almost gone — yet investors have kept buying, competing with individual buyers in standard sales.
The number of so-called absentee buyers, usually cash investors, has dropped slightly in Southern California since hitting a record in January. But they still account for more than 1 in 4 home purchases in the region. And just 8% of those deals were on foreclosed homes in June, compared with 25% a year earlier and a peak of 55% in February 2009.
“Everybody and their dog is an investor,” said Dick Caley, a Long Beach real estate agent. “It has gotten to the point where I do not even return the call.”
As it turned out, housing investors needed neither the prodding of the Federal Reserve nor the bulk foreclosure sales from Fannie Mae, which never materialized beyond the pilot phase. The single-family rental industry now has several major players in multiple markets, with some recently created companies trading publicly.
The mix of investors and their strategies are shifting, with large financial firms starting to pull back and smaller players moving in, looking to buy, fix and flip homes for a quick profit. But rapid price increases are making it harder for people to afford a house and qualify for a home loan.