High-End Houses Lure Flippers From New York to California

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Home flipping, in which a buyer quickly resells a property for a profit, is becoming more popular for high-end houses in the U.S. as deals for cheaper residences slow.

There were 968 single-family houses priced at $750,000 or more that were sold by flippers in the third quarter, according to RealtyTrac, which defines the transactions as those that occur within six months of the previous purchase. The figure was up 34 percent from a year earlier, while rapid trades within the broader market fell 13 percent, the Irvine, California-based foreclosure-data firm said in a report today.

Investors who buy homes and sell them within months are finding they can make more money with houses in higher price ranges from New York to California. Flippers for cheaper homes are facing competition by investors such as Blackstone Group LP (BX) that are acquiring thousands of single-family homes to turn into rentals, while fewer properties are entering the foreclosure pipeline as real estate prices rise and the job market improves.

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Investors Cooling on ‘REO-to-Rent’

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For the past three years they have been swarming over the hardest hit housing markets, buying distressed properties in bulk and pushing prices higher by double digits. The idea for these investors was not to buy and flip, but to hold and rent. Now some investors say they have priced themselves out of the market.

“Higher prices are reducing returns on investment, and investors are responding by cutting back on their purchasing plans until conditions sort out,” said Chris Clothier, a partner in MemphisInvest.com and Premier Property Management Group, which commissioned a national survey of investors conducted by ORC International. “Fewer foreclosures, rising property values and competition from hedge funds are making it tough to find good deals on distress sales.”

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Foreclosure crisis is drawing to a close

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The number of new foreclosure filings in August hit its lowest level in nearly eight years, according to RealtyTrac, an online marketer of foreclosed properties.

Soaring home prices and a big decline in underwater borrowers — those who owe more on their mortgage loans than their homes are worth — have helped drive the trend.

August’s initial foreclosure filings fell 44% to 55,575, just below the 56,063 that were recorded in October 2005. The foreclosure crunch began in summer 2006, at about the same time that housing prices hit their peak.
“This is a strong indicator that the crisis is over,” said Daren Blomquist, vice president at RealtyTrac. “The foreclosure floodwaters have receded in most parts of the country, although lenders and communities continue to clean up the damage left behind,” he added.

The mopping-up process continues, however. In August, for example, the number of homes repossessed by lenders rose 6%, compared with July, to 39,277. But that still represents a drop of 25% year-over-year, and is more than 60% below the peak of repossessions in September, 2010.

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Southern California home sales jump in August

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Southern California posted its strongest home sales for August in seven years as rising prices lured more sellers off the sidelines, a research firm said Thursday.

There were 23,057 new and existing houses and condominiums sold in the six-county region, up 2.8 percent from 22,438 homes sold in August 2012, DataQuick said. The increase would have been much higher without a steep drop in sales of low-priced homes.

Sales of homes between $300,000 and $800,000 skyrocketed 31.4 percent and sales of homes above $800,000 surged 48 percent.

The median sales price was $385,000, up 25 percent from $309,000 in August 2012. It matched a five-year high and marked the 13th straight month of annual double-digit gains.

“Sellers have seen an amazing price jump from just a year ago, allowing many to finally sell at a profit,” said John Walsh, president of San Diego-based DataQuick.

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Buy Homes Without Borrowing Money From the Bank

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Don Nay has purchased more than 3,300 residential properties during the past 30 years and has never borrowed money from a bank to purchase a home. Now he wants to teach other people in Southern California how to buy homes the same way he did.

“Banks are financial institutions, not people,” explains Nay. “They have a cookie-cutter approach to making and servicing home loans in Southern California that is without concern for the person responsible for repaying that loan. I figured it was time to share what I’ve learned about the home buying process so that it might just help a few folks to buy a home or avoid foreclosure. It might help wake the banks up, too.”

Just from April 2012 to April 2013, lenders seized 3,297 homes in Orange County, Calif., through foreclosure. The numbers are even greater in Los Angeles County and San Bernardino-Riverside County. During the first half of 2013 there was a 34 percent jump in judicial scheduled foreclosure actions nationwide.

“If people knew how to buy a home without a bank loan, there wouldn’t be so many loan modifications, foreclosures and repossessions,” said Nay. “In fact, the entire economy would be in much better shape.”

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House flipping in OC on the rise

foreclosuresOC house flipping in OC on the riseNow at levels not seen since the housing boom of the mid-2000s, the practice of “house flipping,” is once again seeing steady increases all over California, including Orange County.

According to a report from DataQuick, a real estate research firm, there were 1,377 houses flipped in the Southland in May of 2013. In June of 2005, at the height of the residential real estate boom, buyers looking to make a profit bought 1,394 homes, according to an article in the Los Angeles Times.

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Inventories are returning to normal

ForeclosuresOC home for saleWhile June inventories continue to be down on year-over-year basis, they rose for the sixth consecutive month and are steadily returning to more normal levels. The number of homes listed for sale increased by 4.3 percent in June to 1.9 million homes, the highest level in the last year, according to monthly data released Monday by realtor.com.

Inventories on realtor.com reached their highest level in more than a year, suggesting that market fundamentals continue to be strong and that housing supply in many markets is gradually catching up with housing demand. At same time, the median age of the inventory increased by just one day in June, suggesting that housing sales are generally keeping pace with new property listings.

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Homeowners who used short sales find their credit sunk

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Wendy Bana, 50, a private school principal in Orange County, California, short-sold her home three years ago because she had to relocate from Oregon for a job. Last year, she discovered that her short sale had been miscoded as a foreclosure, dashing her dream of buying a cabin at Lake Arrowhead, California.

Michael Son was just weeks away from closing on a three-bedroom ranch house in New Jersey last year when his lender called with bad news.

Despite the advertising executive’s 720 credit score and proven ability to make a 20 percent down payment, he couldn’t secure the loan. Somewhere in the fine print of his credit history, the short sale of a previous house in 2010 had been misidentified as a foreclosure.

Son withdrew his offer and reluctantly settled into yet another rental with his wife and two daughters, ages 4 and 6.

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FHFA Exends HARP to 2015

Making Home Affordable

The Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to exend the Home Affordable Refinance Program (HARP) by two years to December 31, 2015. The program was set to expire on December 31, 2013.

“More than 2 million homeowners have refinanced through HARP, proving it a useful tool for reducing risk,” said FHFA Acting Director Edward J DeMarco. “We are extending the program so more underwater borrowers can benefit from lower interest rates.”

In addition, FHFA will soon launch a nationwide campaign to inform homeowners about HARP. This campaign will educate consumers about HARP and its eligibility requirements and motivate them to expore their options and utilize HARP before the program ends. HARP is uniquely designed to allow borrowers who owe more than their home is worth the opportunity to refinance their mortgage. Extending the program will continue to provide borrowers opportunities to refinance, give clear guidance to lenders and reduce risk for Fannie Mae, Freddie Mac and tax payers.

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Are You Due A Foreclosure Payment?

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Are you due a foreclosure payment? Borrowers who were in the foreclosure process in 2009 and 2010 may want to watch their mailboxes closely starting mid-April.

Federal officials have sent out postcards to more than 4 million people across the nation to let them know cash is coming their way — part of a $9.3 billion deal between banking regulators and mortgage servicers that settle foreclosure-abuse allegations.

The allegations center on robo-signing, the bank practice of approving loan paperwork with little or no approval.

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