Home Flippers Out Of Luck
("Flipping" a home - meaning buying a home, fixing it up and selling it for a profit has become outrageously popular in the past few years.)
When the market was booming, many investors would buy fixer-upper homes to quickly sell them for a large profit.
This process became so popular that a crop of cable network TV shows even popped up that followed these "flippers" on a quest for finding shabby houses and turning them into gold mines.
But now that the market is slowing down dramatically, people looking to flip a house are finding that they are out of luck.
The real estate bubble has officially burst, and can no longer support those looking to make a quick sale. Even those looking to sell a family home they have lived in for years are having a lot of trouble.
An August 30, 2006 article by Bruce Spence of recordnet.com, "'Flipping' on a housing market," discusses the decrease in the amount of people looking to profit off of a flip.
"A new survey of 'flipping' - the fast turnaround sale of a house for profit in a strong market - indicates that the levels of investors in the local and California real estate markets have shriveled from a year ago."
"Home 'flipping' statewide declined to its lowest level in more than three years as investors pulled back from a real estate market where home values are leveling off, cutting the chances for profit with a quick turnaround, according to a new survey by HomeSmartReports.com, a real estate information service based in San Juan Capistrano."
The declining market has been affecting just about everyone across the nation. Investors are realizing the market is on a quick decline, and they should get out while they are ahead.
People that were participating in flips recently have still made some profits, but more and more are losing money.
"In San Joaquin County, investors still made money, clearing a median profit of $34,750 in the second quarter, but 23.8 percent ended up losing on their home buys. Statewide, 24.7 percent of investors lost money, but the profits were richer on sales overall, with a median profit of $44,500 per residence. 'Everybody who dove in the market looking for a quick flip really has gotten surprised by the softness of the market,' said Mike Ela, HomeSmartReports.com president. 'Some of these people made money, but they held the property longer so they got the run-up.'"
Areas that are home to resorts are seeing a significant slowdown because many investors left their markets since they could no longer make a quick profit. But builders and homeowners alike are trying to be optimistic about the slowing market.
"Chris Apostolopoulos, KB Home president of the Central Valley division, said investors have indeed dropped out of the area's sales market, which is now in a cyclical 'correction.' But he thinks that's a good thing, adding that he's not worried about the market for new homes over the long term. 'In my opinion, today we're actually building homes for those we're supposed to be building for: families who will live in their homes,' Apostolopoulos said."