A flipper checked in yesterday:
I’m getting really bearish. Nothing makes sense. There’s going to be some flippers without chairs when the music stops. Hopefully we have another 2-3 years in this run. Putting fixers in the MLS has really been eye opening. So many big groups writing offers just to tie them up, impossible for the small guy to pick one off. It used to be that the hard part was the rehab, now the hard part is finding the deal and the rehab seems to be the no brainer, and construction guys are getting cheaper. Hard money getting cheaper too, just paid 1.5 points and 7.99% to buy a house I’m closing on next week.
The market has been logic-free for a while now, and it will come to a halt one day without notice. Keep an eye on the sales count – it will be the first sign of trouble.
But the June count for detached-homes sold in San Diego County still looks in-line with a healthy-ish market:
SD County Detached-Home Sales, June
2011: 2,061
2012: 2,367
2013: 2,328
2014: 1,980 (-15%)
The late-reporters will add enough to get close to last year’s count. The final tally will probably be within 7% to 9% of the 2013 count, which is pretty good considering how hot it was last year.
But if you are thinking of selling, there isn’t enough extra upside potential to wait any longer.
“But if you are thinking of selling, there isn’t enough extra upside potential to wait any longer.”
Exactly. It will take a while for that reality to sink in to the broader market. I think one cause of lower inventory we have seen is Sellers not wanting to leave money on the table in a rapidly rising market. Once the common perception of rocket ship price appreciation is gone, the fear of being the fool that sold too early will be off the table. Lets just hope we settle in to 2-4% appreciation for a few years and finally put this roller coaster to bed. Until the next time, of course. “Flippers” will be out of business, but selective “rehabbers” will always have a business because they add value and aren’t necessarily relying on market price appreciation to make their money.
Service providers will have to bring something of real value to the table besides being in the right place at the right time.