Home Buying in Union City>Question Details

Michael Tsui, Home Buyer in Hayward, CA

So many homes now selling by flippers. If any buyer these homes, flippers will be making over $100,000 to $300,000 in a very short time.

Asked by Michael Tsui, Hayward, CA Sat Oct 19, 2013

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7
Hi Michael,

In any free market economy you have the potential for bubbles that can pop due to excess speculative demand - this isn't going away any time soon because it's driven by human nature.

You might find this an interesting read:
"Bubble or no bubble? It depends on who you ask..."
http://www.housingwire.com/blogs/1-rewired/post/27528-bubble…

You might also want to view the City-by-City Bay East AOR "Weather Report" for September Year-over-Year findings. http://www.youtube.com/watch?feature=player_profilepage&…


Here's the bottom line, in my opinion:

You really cannot make decisions based on generalizations of any sort. You have to target your research!

For example, 1) type of home are you considering, 2) the designated geographic search area, 3) the square footage range, 4) your term of occupation, 5) the trend in interest rates for YOUR targeted loan product, 6) the direction of regional job growth; and because there is a correlation to value, 7) School API scores. This by no means an exhaustive list of variables; however, it's a step in the right direction to understand whether you may be in a "Bubble".

-Steve
0 votes Thank Flag Link Mon Oct 21, 2013
Thanks for you input. Does this mean buyers have no problem with these higher home prices going forward or will the housing market pause and start correcting somewhat? Will flippers willing to gamble and keep buying over asking prices to flip to higher prices? When will this peak? Housing now is more like trading stocks. Is this the new way for buying and selling homes? If so, should commissions be much lower in the future? I guess these are questions that no one really knows except can opin on only.
Flag Mon Oct 21, 2013
Thanks for you input. Does this mean buyers have no problem with these higher home prices going forward or will the housing market pause and start correcting somewhat? Will flippers willing to gamble and keep buying over asking prices to flip to higher prices? When will this peak? Housing now is more like trading stocks. Is this the new way for buying and selling homes? If so, should commissions be much lower in the future? I guess these are questions that no one really knows except can opin on only.
Flag Mon Oct 21, 2013
Thanks for the questions, Michael.

“Interesting question are buyers willing to buy at peak level prices and even over peak level prices now?”

Your real question did not appear until your second response to your original post.

Your assumption that prices have “peaked” is not supported by any facts. Prices are still rising, so no peak has been reached. Long term owners are eager to buy now before interest rates rise – which they will inevitably do at some future point. Buyers also see prices continuing to rise – perhaps somewhat less rapidly than in the last year – and want to get in earlier in the escalation rather than later.

There is nothing wrong with flippers making a profit on the purchase, rehabilitation and sale of a property. Buyers of flipped properties get turn-key houses with modern fixtures. Buyers still have the opportunity to do inspections to satisfy themselves of the condition of the property.
0 votes Thank Flag Link Sun Oct 20, 2013
Flippers often times buy the home at a really low price, which allows them to fix it up and resell it. As long as the buyer gets a fair deal on the home, it shouldn't matter if the flipper makes $10k or $100k.
0 votes Thank Flag Link Sun Oct 20, 2013
True. I agree. i was wondering should buyers take a break and let the price cool down before bidding even higher just to see prices fall again and regret about it later when pries fall back down in the next few years.
Flag Mon Oct 21, 2013
True. I agree. i was wondering should buyers take a break and let the price cool down before bidding even higher just to see prices fall again and regret about it later when pries fall back down in the next few years.
Flag Mon Oct 21, 2013
I'm not sure what your question is here - we live in a free market where people invest money to make money and reap the rewards if a buyer is willing to pay the asking price. There is a lot of risk involved in flipping a home and the average returns are no where close to the numbers you show here. If buyers don't see the value, they don't buy. This isn't just about houses - people flip all kinds of things to make money. Cars, antiques, jewelry ... this type of activity has been going on for years - long before HGTV came along. And, as someone who has actually flipped houses, there is WAY more to it than meets the eye.

Although there are a decent number of flips out there, owner-occupied homes represent the overwhelming majority of sales.

Here is a post you should read:

Current Bay Area Market NOT A Bubble: Top 5 Buyer Recommendations
http://www.trulia.com/blog/carl_medford/2013/04/current_bay_…
.
0 votes Thank Flag Link Sun Oct 20, 2013
Yes, we do live in a free market and nothing wrong with flippers flipping homes for sale but I remember how we created the housing bubble before and it is now happening again.

What happens is when a buyer is going to buy a home, a flipper comes in and buy that home for say $50,000 over the price of the other bidder. flipper than paints the house and flips it for say $50,000 higher price. The buyer who lost the bid now will bid for a home $80,000 more to try to buy another house. This is what happened during 2002 into early 2007. If this happens again, we are repeating history again. Those buyers who will be buying at the future peak will be burned.

The bad thing about fast rising home prices is that rents also go up so that the average folks will also suffer. Rents must go up to help pay for higher property taxes. Property is pretty high when prices escalate. I see another bubble coming within the next 5 years. The next one will be much bigger than 2008 due to Chinese bubble.
Flag Sun Oct 20, 2013
Yes, we do live in a free market and nothing wrong with flippers flipping homes for sale but I remember how we created the housing bubble before and it is now happening again.

What happens is when a buyer is going to buy a home, a flipper comes in and buy that home for say $50,000 over the price of the other bidder. flipper than paints the house and flips it for say $50,000 higher price. The buyer who lost the bid now will bid for a home $80,000 more to try to buy another house. This is what happened during 2002 into early 2007. If this happens again, we are repeating history again. Those buyers who will be buying at the future peak will be burned.

The bad thing about fast rising home prices is that rents also go up so that the average folks will also suffer. Rents must go up to help pay for higher property taxes. Property is pretty high when prices escalate. I see another bubble coming within the next 5 years. The next one will be much bigger than 2008 due to Chinese bubble.
Flag Sun Oct 20, 2013
Since there are fewer foreclosed homes there are fewer flipped properties.

Flipped properties often serve a good service as buyers with little money to fix a home can buy a home already fixed.
And purchased at market value.

Brian
0 votes Thank Flag Link Sat Oct 19, 2013
Interesting question is are buyers willing to buy at peak level prices and even over peak level prices now? Or buyers think home prices are cheap now? Any idea.
0 votes Thank Flag Link Sat Oct 19, 2013
Long term home owners are also seem to be listing their homes for sale to get out of this peak levels. It does seem to me to be the case.
0 votes Thank Flag Link Sat Oct 19, 2013
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