The media wants you to believe that foreclosures are tanking the values of every neighborhood.
They need to look a little harder at what is really happening on the street. If the banks were more realistic about their opening bids at the trustee sales, they could be blowing out more of their defaulted properties, because there are plenty of investors looking to flip everything in sight.
We’re in a foreclosure economy!
Yes, this flipper hasn’t sold this yet, and he might only get what he paid for it – although this particular long-time investor is known to rent, rather than dump. But at whatever price he sells this for will define the true retail value.
If almost a third of trustee sales are being flipped for retail, the media should not only report it, they should factor the new values into the overall equation – and quit pushing the standard garbage.
Flip all you want. Just make sure you sell quick. Because if interest rates or supply go up (both likely to happen soon) flippers risk selling as a loss.
All I have to say is it’s about to become real interesting. Are the macro economics which are currently crumbling as the Fed mops up QE-2, gonna roll into further So Cal real estate declines?
There are so many negatives in buying/flipping/renting real estate now. I don’t think it’s gonna hold up.
JtR (6 minute mark)
“the flippers are providing a service, they are doing what the banks won’t do, fixing them up and reselling them for the right price.”
Exactly.
Some times flippers get dismissed or lampooned but they ARE providing a service just as Jim says.
They take older/dated properties, make them newer and this provides a good comp for the neighborhood.
David,
Flippers offer liquidity. In a hyper-liquid market, that translates as demand, and can be mis-read as a true demand. That’s what threw all of the mainstream economists who assumed that the price of houses was due to increased end-user demand.
The real issue is that the prices were sticky on the way up, and didn’t adjust to the realities of a changed interest rate environment. On the way down, they can still provide liquidity to the mispricing, but only when it is with an upward bias, otherwise, they’re just OPT’s. Even if a bank holds them.
Chuck
Last year the third-parties bought 28% of the total SD trustee sales too.
It serves as another can-kicking device.
If lenders/servicers really wanted to blow out some properties, they could provide sharper opening bids and we’d find out how much flipper demand there is.
But apparently they are content with their inefficiencies, and taking back over 2/3 of the properties offered for sale at the court house steps.
Everywhere we look, we see screwed up, inefficient (and weak) attempts to resolve this mess.
Looks like the flipper got a pretty good deal on that house! I am pretty certain the return will be decent with the view, size and upgrades. It looked turn key.
In any other area with houses like that I would say at 375-400k min.
Nice post JtR
Great video. Will be interesting to see what it sells for..
All flippers need is someone as ignorant as Sarah Palin. Paid 1.7 million for a $800,000 house.
The situation with the bathrooms on this one is pretty unfortunate, IMO. Also, the little labyrinth upon entry is a turn-off for me.
However, 310 seems like a good deal for whoever picked this up…