They're back
A breed not seen for awhile on the real estate landscape is becoming active again.
Some call them speculators, others refer to them as investors, they seem to prefer the term, House Flippers.
In southern California at least there has been a return of this hardy homebuyer. This provides further evidence that lower prices are getting the attention of more than the typical people looking for homes.
A recent newscast on Los Angeles' KABC featured a story about these "flippers."
Reporter Ric Romero says "Sales are moving from inland bargain areas to entry and mid-market homes closer to the coast." In other words, from low priced homes to higher priced homes.
House flipping is most common where foreclosures are highest. More foreclosures usually make prices the lowest. One self-described house flipper, Greg Touessieng, said his efforts are helping bring prices back up in the neighborhoods where he invests.
"Ninety-nine percent of our homes sell for the top comp in that neighborhood," Touessieng said. "In this market, what I find is the more that needs to be rehabbed the more the reward. And the properties are selling very quick." He goes on to say that he typically makes 20-25 percent profit from the homes he rehabilitates and sells.
Traditionally, we have seen that, as prices rise in California, people move north in search of better values. As values rise in the west, buyers in the past have moved inland which drove, in part, the boom years of 2005 and 2006. A recent report from San Francisco states that resale homes in the Bay area increased by 30 percent in April as foreclosures fell. The median price there for a home is $400,000. Our median price is $160,000.
What this new wave of activity in many southern areas will mean for us may take awhile to realize. We continue to see price reductions although not to the extent of 2008 and 2009. Homes are definitely more affordable than during the boom times, but for how long?
The Fed announced last week that it sees no need to raise interest rates to check inflation as inflation has apparently checked itself. Mortgage rates dropped again last week with some predicting they will remain low through the end of the year. This has taken us by surprise, but it is good news nonetheless.
Low interest rates are a good incentive to get buyers of all types back into the housing market. Don't feel alone though if you find the market a bit confusing. These are uncertain times. Those of us who study the market daily are challenged with predicting the future. The best measure may be to look to the past. Historically we know that housing continues to appreciate over time with the occasional dip (recession) in prices.
Some experts believe that housing may be headed for a "saw-tooth" bottom to the market. Sellers who are waiting for optimistic news about the market may rush to sell as prices go up, driving prices down. This is the law of supply and demand.
The trick, as a buyer, is to buy when prices are down and for flippers, to sell when prices are up. Are you game?
For the best available data on inventory, pricing and opportunities in local real estate, call a local Realtor. Visit our website for a list of brokers, agents and available properties.
Kim Cooper is a real estate broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664 with your questions or commentary. Information: www.cdarealtors.com