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August 29, 2006
Flipping is flopping in Cali
Interesting article on Inman News (read it quick; articles are free for a day or so but then available only to paying subscribers) about how flipping has turned into a dangerous game in California. The real story is in the accompanying table, where it shows the median gain -- or loss -- suffered by flippers in various counties. Look at Marin County, where median loss was $86,000. Wow! I'm sure that's off a small sample, but that's still real losses. For the life of me, I can't fathom why anyone is still trying to flip at this late hour. I also suspect there are going to be a lot of flippers who end up renting out their homes.
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do you really think they'll try to rent out their properties, and take a loss every month for the indefinite future, or just cut their losses and get out at whatever price they can get? i would guess the latter. it's got to be hard to eat a few thousand dollars every month.
any flipper who bought in the last year can in no way expect to rent out their properties for enough to cover all of the monthly expenses, especially after their mortgage's teaser rate expires. i am expecting to see a lot of short sales.
Posted by: mike at August 29, 2006 07:22 PM
Marin was always a high end property, for the last thirty years working into that high a ceiling was always in question in the Bay Area. Very risky, in an overall market that is up more than 300% over the last five years, and Marin was still a high end property, at one point last year it reached only 7% affordability for the Bay Area population. One point on Bay Area markets, over the last five years successful Bay Area Asians, and there family money, that is parents buying children and relative into this market, have transformed communities and helped to hold many prices above market level. That Asians family money has been a clear percentage plus for Bay Area markets, for about the same thirty years.
Posted by: Mike Reardon at August 30, 2006 02:13 AM
Check out this somewhat hilarious blog on flippers in Orange County (specifically, Irvine):
Posted by: CrucialTaunt at September 13, 2006 02:55 PM