Hey Visalia, you are flipping nuts! Literally, you appear to be nuts about flipping – houses, that is.

According to recent data, of the 117 Metropolitan areas with at least 250 home flips, Visalia-Porterville has the third highest percentage (10.1%) to all home sales. Put another way, for every 10 homes sales done in Visalia, one is a “flipper”. For those who are unfamiliar with “flipping”, I am not using it in a pejorative sense (although, as we will see, that does not mean it isn’t pejorative). Flipping refers to (usually) run-down homes that are bought by investors. These investors then fix them up and “flip” around and sell them for a handsome gain.

Why It Matters For You:

This high rate of house flipping is relevant for a couple of reasons:

  • If homes are flipping like this in Visalia, you can be sure similar activity is ongoing around the valley. In fact, around the nation house flipping is back to a 10-year high.

  • House flipping has all kinds of strange affects on a housing market. For example house flips:
    • boost “comparable home values” of similar, but perhaps non-renovated, homes in the same area.
    • remove lower-price brand supply, turning them into higher-price brand, causing a “lack of supply” and raising prices.
    • can boost organic demand metrics, because their sales are counted twice – usually in a very short time frame.
  • The popularity of house flipping and the continuing low-interest rate/low or no-money down environment is cause for concern. House prices in some areas are nearing or exceeding their 2007 peaks.
  • If you are considering buying a house right now, prepare to pay a premium…and then prepare to watch it disappear.

Conclusion

House flipping is just one of many factors contributing to the ridiculously high real estate prices. The Federal Reserve’s suppression of interest rates over the last eight years gave way to lower interest expenses and higher prices. In addition, FHA mortgages as well as many municipal programs are enabling low-income buyers to bid up prices.

These factors (and more) lead us to this conclusion: it’s a good time to sell, and a really bad time to buy. Some individuals are still underwater from their home purchases before the housing crash in 2007. Many who bought near the top had to let their homes go and suffer lasting damage to their credit. Sadly, this may be a season of reruns.

If you want to know more about our economic outlook and how we are helping prepare our clients for the future while accomplishing their objectives, give us a call today!

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