Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (28950)	3/19/2005 3:15:06 PM
From: ild	Read Replies (1) \| Respond to of 110194

'Flipping' of O.C. real estate seems to be hitting the wall The percentage of those buying homes and selling within six months declines in January. By HANG NGUYEN The Orange County Register Making a quick buck off Orange County homes is apparently on the decline. According to the latest statistics from market tracker DataQuick, 70 people selling residences in January – or 2.6 percent of the owners of all homes resold – had bought that house or condo within the previous six months. Such quick trades are called "flipping" in real-estate circles. In January 2004, 120 homes were flipped, or 4.3 percent of all deals. The past five Januarys have seen flipping average 79 deals, or 2.9 percent, of all transactions. The frequency of these quick deals has declined from the five-year high reached last April of 4.5 percent of a month's sales, or 186 deals. Industry experts pay close attention to flipping. When rapid trading of homes becomes common, it may signal the peak of a housing cycle and the onset of falling prices. That's what happened in the last housing boom, in 1989. Builders don't like this kind of investor. Short-term owners don't help create a sense of community that's critical to selling a new neighborhood. Developers also see flippers as competition for buyers. So it's good news for builders when flipping is down. "We have seen a material reductionin investor traffic," said Steve Kabel, Southern California regional president for builder John Laing Homes in Newport Beach. However, John Laing continues to require its buyers to sign "anti-speculation" papers saying they'll own the home for a year. The company implemented this policy last year, when it noticed flipping was on the rise. Flipping may be slowing because it may not be as lucrative as it was last year. Local home-price appreciation is down. In January, the median home price was up 17 percent in a year. Last April, when flipping peaked, annual price appreciation was 30 percent. The National Association of Realtors trade group this week warned home shoppers against speculative buying. "It's true that some people have made fast profits, but it's not to be expected," said NAR President Al Mansell. "In fact, it can be risky." But another statistic indicates that investors still like Orange County real estate. A DataQuick estimate of the number of homes bought but not occupied by its owners increased from 8 percent of all deals in 2003 to 10 percent last year. These buyers are "comparing owning property to investing that money elsewhere," said DataQuick analyst John Karevoll. "It's a bit of a roll of the dice, but over the past seven years, (Orange County housing) has been a good investment decision." ocregister.com Orange County February home prices ocregister.com