September 16, 2013

Flippers Are Selling To Other Flippers

The Marin Independent Journal reports from California. “It’s up, up and away once again, with home prices in Marin increasing 24 percent from last year to $942,000 in August 2013, according to the Marin County Assessor’s office. While the median price dipped from $990,500 in July, Marin real estate agents characterized the drop as normal for August. While agents agreed that the market is strong and prices are going up, they characterized some of the price increases as artificial. ‘Sellers should not be tempted to add 24 percent to whatever they would have gotten for their houses last year and expect their homes to sell for that amount,’ said Julie Leitzell, an agent with Alain Pinel in Mill Valley. ‘The median has to do with fewer foreclosures and more high-end houses selling.’”

The Mercury News. “The sizzling Bay Area housing market cooled in August following one of the most dramatic run-ups in recent years. Single-family home sales dropped 3.2 percent from a year ago, and were down 8.8 percent from July, according to DataQuick. While the median single-family price of $588,000 extended several months of double-digit annual gains, it was 3.9 percent lower than it was in July, the first such drop in six months. Nearly 10 percent of the homes listed last week in central Contra Costa County had price reductions, said Kevin Kieffer, a Danville real estate agent. He said some sellers overshot the market and had to pull back. ‘There’s more of a selection for buyers, and more of an opportunity to come in at the asking price or even below it,’ he said.”

The Press Democrat. “Sonoma County’s median home price dipped 8 percent in August as agents reported fewer buyers bidding on the same homes, possibly linked to higher interest rates. The median sales price for a single-family home declined to $440,000 from $478,375 in July, according to The Press Democrat’s monthly housing report compiled by Pacific Union International VP Rick Laws. Mike Kelly of Keller Williams in Santa Rosa said he is seeing fewer multiple offers. ‘There’s no sense of urgency seen in the marketplace any longer,’ Kelly said.”

“As rates rose this summer, ’sellers finally got a little bit of a reality check,’ said Trish McCall, a longtime agent in Santa Rosa.”

The Sacramento Bee. “Investors and distressed sales now make up a much smaller part of Sacramento’s real estate market than at anytime in recent years, DataQuick reported. The share of resale homes in Sacramento County sold to cash buyers dropped to about 28 percent in August after peaking in February at 43 percent. August’s cash figure was the lowest since June 2010. Absentee buyers made up about 30 percent of the Sacramento market in August, after topping out in January at 45 percent. Almost all absentee buyers are investors, said DataQuick analyst Andrew LePage.”

“The factors that led to a big run-up in prices over the past year are abating, LePage said. The Sacramento region’s historic housing rebound from the depths of the crash was driven by ultra-low mortgage rates, a scant supply of homes for sale and high levels of investor activity. ‘Now each is in reverse,’ he said. ‘Rates are higher. Supply is greater. And investor levels are coming down.’”

The Union Tribune. “San Diego County home prices and sales slipped from July to August as the market took a breather from recent increases, DataQuick reported. Sales also were lower, down 9.5 percent from July to 4,099 transactions, a common seasonal dip. Michael Lea, a real estate professor at San Diego State University, said he was not surprised by the price dip but was ‘a little puzzled’ that sales are not rising as fast as they should at this point in the economic cycle. After all, Lea noted, many homeowners have left the underwater-mortgage years, when their homes were worth less than their mortgages. They also are aging and want to move to a smaller home or are growing their families and need bigger homes.”

“The explanation may be that would-be sellers are sitting on their homes, expecting prices, which rose 20.2 percent over the last year, to repeat that feat in the next year. If they did, the median price for all homes in August 2014 would stand at $499,000, not too far from the all time peak of $517,500 in November 2005. Another roadblock may have to do with mortgage financing. Lea said the tighter lending rules mean buyers must accumulate 10 percent to 20 percent in a down payment and carry a FICO score of 720 — both factors that are much higher than a decade ago.”

“Separately, the Greater San Diego Association of Realtors reported that as of Thursday, the number of active listings in the county stood at 6,838, up from 6,251 in August and 5,935 in August 2012.”

The Los Angeles Daily News. “The region’s housing market is starting to exhibit a familiar sheen. Just like prices, adjustable rate and jumbo mortgages are popping up again, according to DataQuick. Adjustable loans accounted for an 11.6 percent share of August’s 23,057 sales of new and previously lived-in houses and condominiums across Southern California. That was up from a 10.9 percent share in July. August was up a whopping 96.6 percent from its 5.9 percent share a year earlier. Last month’s ARM activity was the highest for any month since this loan product accounted for a 12.6 percent share in July 2008, DataQuick said.”

“Jumbo loans — mortgages above the conforming limit of $417,000 — accounted for 27.2 percent share of August’s lending activity, up from 20.3 percent a year earlier.”

The Los Angeles Times. “The number of so-called absentee buyers, usually cash investors, has dropped slightly in Southern California since hitting a record in January. But they still account for more than 1 in 4 home purchases in the region. And just 8% of those deals were on foreclosed homes in June, compared with 25% a year earlier. ‘Everybody and their dog is an investor,’ said Dick Caley, a Long Beach real estate agent. ‘It has gotten to the point where I do not even return the call.’”

“The mix of investors and their strategies are shifting, with large financial firms starting to pull back and smaller players moving in, looking to buy, fix and flip homes for a quick profit. The short-term mentality worries some economists. ‘Flippers are selling to other flippers, who are selling to other flippers, until there is nobody to flip the home to,’ said John Burns, a housing industry consultant in Irvine. ‘And that is when you have a big downturn.’”

“Experienced flippers say the increased competition is forcing them to change tactics. Brian Coomans, owner of investment company GGB Properties Inc. in Long Beach, sees a short window of time left to make money. ‘I know I am not going to be doing this forever,’ he said. ‘I have maybe a one-year window, a two-year window to be flipping homes like this.’”

Bits Bucket for September 16, 2013

Post off-topic ideas, links, and Craigslist finds here.