Monthly Archives: January 2014
House Flips Up 16% as Prices Rebound – If you thinking about getting into House Flipping Call me ASAP, You won’t regret it
Investors are flipping houses again, a trend that had become popular during the housing boom but fell off after home prices started dropping. Now, with home prices back on the rise again, many markets are seeing flips on the upswing.
Homes that were purchased and then resold within six months accounted for 4.6 percent of all U.S. single-family home sales during 2013, according to RealtyTrac's fourth-quarter 2013 Home Flipping Report. House flipping was up 16 percent from 2012 and up 114 percent from 2011, the report shows.
Rising home prices have helped investors see profits again. The average gross profit on flips was $62,761 in the fourth quarter of 2013, up from $52,746 a year earlier.
“Strong home price appreciation in many markets boosted profits for flippers in 2013, despite a shrinking inventory of lower-priced foreclosure homes to purchase,” says Daren Blomquist, vice president at RealtyTrac.
In 2013, 21 percent of all homes flipped were purchased out of foreclosure, down from 27 percent in 2012 and 32 percent in 2011, the report shows. But investors are still finding homes to buy at an average discount of 13 percent below market value, the same average discount as 2012, “indicating that investors are finding discounted buying opportunities outside of the public foreclosure process — particularly in those markets with the biggest increases in flipping for the year,” Blomquist says.
The largest increases in flipping nationwide occurred on homes with a price of $400,000 or more.
What’s more, the average time to complete a flip is shrinking: 84 days in 2013, down from 86 days in 2012 and 100 days in 2011, according to RealtyTrac’s report.
Metro Areas With Largest Increase in Home Flipping in 2013
- Virginia Beach: +141%
- Jacksonville, Fla.: +92%
- Baltimore, Md.: +88%
- Atlanta: +79%
- Richmond, Va.: +57%
- Washington, D.C.: +52%
- Detroit: +51%
Meanwhile, the major metros that saw the biggest decreases in home flipping in 2013 were Philadelphia; Phoenix; Tampa, Fla.; Houston; and Denver, the report showed.
The housing market has been experiencing a “healthy recovery” over the past two years, with home sales last year rising to the highest level since 2006, according to the National Association of REALTORS®' latest housing report.
“Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates, and a large pent-up demand driving the market,” says Lawrence Yun, NAR’s chief economist. “We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population.”
Existing-home sales rose 1 percent in December 2013 compared to November and reached a seasonally adjusted annual rate of 4.87 million.
Existing-home sales for all of 2013 reached 5.02 million sales, 9.1 percent higher than 2012, and the largest rise since 2006 when sales were at 6.48 million at the close of the housing boom, NAR reports.
Home prices were also on the rise in 2013, up 11.5 percent over 2012, with a median existing-home price of $197,100 last year compared to $176,800 in 2012. It was the strongest gain in home prices in a year since 2005, when home prices rose 12.4 percent, NAR reports.
NAR President Steve Brown says that with job growth expected this year, home sales should hold despite rising home prices and higher mortgage rates.
“The only factors holding us back from a stronger recovery are the ongoing issues of restrictive mortgage credit and constrained inventory,” Brown says. “With strict new mortgage rules in place, we will be monitoring the lending environment to ensure that financially qualified buyers can access the credit they need to purchase a home.”
Housing Recovery Regional Snapshot
Here’s a look at how existing-home sales fared in December and for the year across the country:
- Northeast: Existing-home sales fell 1.5 percent in December but remain 3.2 percent higher than December 2012. Median price: $239,300, up 3.6 percent from year ago levels
- Midwest: Existing-home sales dropped 4.3 percent in December and are 0.9 percent below year ago levels. Median price: $150,700, 7 percent higher than December 2012.
- South: Existing-home sales rose 3 percent in December and are 4.6 percent higher than December 2012. Median price: $173,200, up 8.9 percent from a year ago.
- West: Existing-home sales increased 4.8 percent, but are 10.7 percent below a year ago. Median price: $285,000, up 16.0 percent from December 2012.
By REALTOR® Magazine Daily News
Daily Real Estate News | Saturday, January 18, 2014
Bitcoin has been in real estate news a lot lately. Is it a flash in the pan, or is it something you should consider for your business?
“We’re way past the fad stage,” says Alan Silbert, founder and CEO of BitPremier, a website that lists luxury products for sale using the digital currency and acts as an intermediary for transactions. Silbert addressed a group of real estate professionals and others at Inman Connect in New York on Thursday.
BOND New York recently announced it will be using bitcoin, and Silbert predicts that more businesses are going in that direction. Not only are these companies getting a fair amount of media attention, but Silbert says accepting bitcoin could also bring to a brokerage clients who are younger and more tech-savvy and who have above-average wealth.
“There’s a lot of press value,” he says, but “you’re opening yourself up to another buyer base.”
Digital currencies are not backed by any central banking or governmental authority, which makes many nervous. But Silbert says the technology behind bitcoin is supported by “military-grade cryptography,” and he expects the government to get involved this year.
“The regulators are feeling bitcoin out,” Silbert says. He adds that the U.S. Senate held a largely positive hearing on bitcoin last year, and he predicts “the IRS will probably come out with some guidance this year.”
So how do you go about converting bitcoins to “real” money? Silbert says there are companies out there that can help you minimize the risk.
Even if you’re not ready to start accepting bitcoin, you owe it to your business to know about it.
“Virtual currencies are here to stay,” he says. “At the absolute least, I would implore you to educate yourself [about] bitcoin, because you’re going to have customers wanting to use it.”
—By Meg White, REALTOR® Magazine
Daily Real Estate News | Saturday, January 18, 2014
In order to have a fully recovered housing market and economic recovery, economists point to the need for four positive indicators:
1. A healthy job market with low stable unemployment;
2. Mortgage delinquencies that have returned to historical averages;
3. Home prices consistent with an affordable mortgage payment–to–income ratio; and
4. Home sales that are in the range of historical norms.
So, is the housing market inching closer?
Freddie Mac’s U.S. Economic and Housing Market Outlook for January takes a look at how the housing market is performing among these four indicators. Economists note that the unemployment rate — while inching down — still remains high at 6.7 percent. Meanwhile, mortgage delinquencies have fallen to 5.88 percent — nearly half of their peak rate but still higher than the national average of about 2 percent, Freddie notes.
Home prices still have some room to grow without outpacing income growth, economists say.
“From 1999–2006, mortgage payments on a hypothetical 30-year fixed-rate mortgage would have increased by 50 percent more than income growth,” Freddie Mac notes in the report. “Currently, payment-to-income ratios are only 60 percent of the level we had in 1999, suggesting room for continued housing growth.”
Finally, home sales have risen over the past two years but remain below levels from a nearly a decade ago. Home sales, historically, average a rate of about 6 percent of the housing stock every year. They dropped to 4 percent during the housing crisis. Economists are predicting a 5.7 percent pace in 2014.
"As we start 2014, the housing recovery continues its steady pace,” Frank Nothaft, Freddie Mac’s chief economist. “House-price gains will likely moderate from last year's pace but rise about 5 percent in national indexes. Home sales, as well as other key indicators, continue to trend in the right direction, although in some markets we are seeing the sales recovery strengthen while many others remain weak."
Source: Freddie Mac and “Are We There Yet? Freddie Mac Says Recovery Has a Ways to Go,” Mortgage News Daily (Jan. 16, 2014)