SoCal house-flipping roaring back

July 29, 2013

house handsSignaling a potential statewide housing sector recovery, the practice of flipping houses in Southern California has suddenly reached near-record levels, matching the 2005 high. (Los Angeles Times)

Flipping of residential units at the peak of the busing bubble was in retrospect a warning sign that problems were on the immediate horizon.

But real estate experts contend there is a major difference in the housing activity of today, in that low- or no-interest mortgage loans are not part of the equation: most speculative home purchases are being made with purchasers’ cash.

That means that no financial institution is at risk, as was the case when the housing market imploded five years ago. Instead, it my be a sign of a healthy economic recovery.

Median prices in many Southern California areas have been increasing by 20 percent monthly this year.

“No matter how you look at it, flipping levels are high in a historical context,” said DataQuick spokesman Andrew LePage. “If the rate shot up from here, then I think that does become a warning sign.”

San Diego has been experiencing near-record sales as speculators flip houses at the highest rate in decades.


13 Comments

  1. tomsquawk says:

    and i just read today, further down south, that flipping is all over; the market has changed. where’s the truth? report it after it’s over?

    Like or Dislike: Thumb up 0 Thumb down 0

  2. Jorge Estrada says:

    Flipping houses or flipping the bird is offensive to others.

    Like or Dislike: Thumb up 0 Thumb down 1

  3. Slowerfaster says:

    This is illusory. It is a false measure on the state of the economy. Just another artificial statistic that is a band-aid coverup of the ongoing hemmorhage of jobs, net worth, and spending power ( lack of it ) affecting all but the super-rich.
    This is the long term hangover resulting from the housing bubble and crash. The very institutions that helped cause the crisis are now profiting … on top of their previously suspect gains.

    House flipping ? I call it House Stealing !

    Like or Dislike: Thumb up 4 Thumb down 2

    • r0y says:

      Woah! I am agreeing with you! The “market” is so corrupt and rigged, that I have a hard time trusting any “good news” announced.

      When my neighbors have jobs and can afford their house, then I’ll believe things are turning around. But seeing more and more homeless (and not just the addict types) causes me to believe there is no such rainbow and lolipops to be had for us.

      Like or Dislike: Thumb up 0 Thumb down 0

  4. leatherpink says:

    The problem with flipping homes is, it causes major inflation and creates the housing market to sky rocket with people already taking risky loans again. We are already seeing people borrowing again on 3% down on fixed 30 year homes with small employment history to not really verify they will pay their loans.

    We’re already heading back to another housing crisis because the lenders are doing it allover again. Getting a home is really easy and the price people are paying in San Luis Obispo is doomed to fail because of these flip flop homes, sellers are getting really greedy after a bad recession. Anyone could of bought a home a $100,000 less 7 months ago in San Luis Obispo.

    Guess what, thanks to these out of town cash offers, that don’t live in San Luis Obispo and flipping homes like no tomorrow where the locals are already cash strapped making risky loans on these out of town investors have done.

    I give it 2 years and San Luis Obispo will again hit the ground hard and people who paid more than they should of will have another crisis they should of been warned about buying in San Luis Obispo. Invertors and real estate agents do not care about what happens, it about getting the sale and leave. Don’t get me wrong, there are wonderful real estates but they also some really bad ones that will hurt this housing crisis for greed.

    Especially when homes are done on cheap upgrades from Home Depo and they want to charge buyers more than double and more for a flip that anybody could of down and bought better updates. I seen homes sold in San Luis Obispo for $300,000 and 4 months later, they list those homes for almost $600,000 done with cheap up dates from Home Depo. I mean serious to raise a house that much with $50,000 of cheap updates from Home Depo, it’s like your buying a Wal Mart home at a price that should be a castle is more like a shoe box.

    Buyers, really be careful being fooled on these homes. Do some research and go tot he City and find our more about the home that’s on for sale, you may find things on there that the seller isn’t telling you.

    Like or Dislike: Thumb up 8 Thumb down 4

    • tomsquawk says:

      unfortunatley the “courthouse step sales” are no longer relevant and gov’t intervention will make it worse? where are the peasants with torches and pitchforks?

      Like or Dislike: Thumb up 0 Thumb down 0

  5. calvertworthington says:

    In my 60+ years of California living I’ve watched variations of this ‘housing – lender’ exercise cycle through at least 3 times. In each version, the lenders and brokers make out like bandits. Not much different than a visit to your friendly car dealer.
    - Fast talked into buying more than you can afford with the assurance as to the quality of your purchase.
    - Smiling lenders that prevaricate and gesticulate in their loan presentations.

    Banks, lenders, and their well-dressed investors, enjoy this.

    Like or Dislike: Thumb up 7 Thumb down 1

  6. godislanguage says:

    I’ll take a busload of Jihadist over one Flipper any day, at least its open season on a Jihadist.

    Knowing how dysfunctional our fractional-reserve banking system has become coupled with the military-industrial complex and government crack habit of expanding the nations debt, I can’t think of anything more vile to the well being of our country then the practice of flipping houses. CALL IT WHITE COLLAR TERRORISM pfff!

    It’s worse than people doing drugs, the individual has a choice, with flipping houses, it destabilizes the economy with short term gains for the gamers that figured this game out and the rest of the established society has to pick up the pieces.

    We need to define what a flip is and regulate it into extinction…

    Study how money is created, DEBT is the this nations Achilles heal. Time to restore value added activities that create culture and value and provides for a stable society…else keep building prisons & mental institutions to take care of the huddled masses of unemployed workers who can’t afford housing and have turned to crime and drugs to mitigate their sufferings.

    Like or Dislike: Thumb up 9 Thumb down 8

    • NorCoMod says:

      Most of the house flippers (maybe even all of them) buy the properties on the courthouse steps from foreclosure sales. They are strong buyers and they pay cash as required by the lein holders or banks.

      Joe Blow (that is you or I) are free to buy directly from the foreclosure sale….all you need is enough cash to make the purchase outright. And you need to make the decision to purchase right then and right there. Remember the buyer is getting the house for less than market price mainly because he is buying it “as is”. No inspections, no nothing. If there’s any hidden problem, it’s his/her problem. How many people do you know that would take such a risk?

      When the house is resold it goes to a conventional buyer with a 30 year mortgage. And yes, that regular buyer pays more and the profit goes to the interim buyer. I’m not saying flipping is the greatest thing, I’m just saying it basically fills an interim need that the general public can’t meet.

      If you want to regulate something into extinction, I’m sure our local leaders have plenty of other solutions up their sleeves in search of a problem

      Like or Dislike: Thumb up 12 Thumb down 2

      • tomsquawk says:

        “I’m just saying it basically fills an interim need that the general public can’t meet.”

        why can’t the general public meet it?

        Like or Dislike: Thumb up 1 Thumb down 1

  7. Rambunctious says:

    People are flipping homes again but they have learned from the past. During the last house flipping boom the house flippers spent a large amount of money to clean and fix up their investments. Many of them were left holding the bag when the market took a beating. This time they are doing very little to these homes prior to the sale. So of course contractors are not benefiting thus far from this latest house flipping. Lets hope that changes…

    Like or Dislike: Thumb up 5 Thumb down 5

    • tomsquawk says:

      yes, there may have been some value added in the last boom. i also observed scenarios whre there was none. unless they were doing a buy and hold as a landlord and building a portfolio flipping was speculation and doing that assumed short term risk. this time may be a bit different as lenders need to get rid of foreclosures quickly, partly due to regulator pressure.

      Like or Dislike: Thumb up 5 Thumb down 0

  8. tomsquawk says:

    someone explain to me what healthy role do speculators play and what service do they supply in the marketplace? flipping is to make a quick gain by a low-level real estate player. suede shoes all the way. i normally object to gov’t regulation but you shouldn’t mess with housing in California. my brother has a “farm” in Illinois. it was worth $100,000 20 years ago, it still is.

    i loved living in Canada, besides real estate, they didn’t play with warm clothing or food. i could buy an avocado from California cheaper in Ottawa than i could in California

    oh, and i love the show “flip this house” thanks.

    Like or Dislike: Thumb up 6 Thumb down 8

Comments are closed.