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Housing Bubble 2.0 Edition: "25 Markets Where Flipping Homes Is Most Profitable"

Tyler Durden's picture




 

Tuesday's Case Shiller update index showed something very troubling: as a whole, the US housing market in its broadest sense, has barely budged in the past four years (chart). And yet, what is unmistakable, and what has given many the impression that there is a "recovery" (despite clear recent signals to the contrary) are media attempts to spark a buying frenzy in several of the key markets that were responsible for the prior housing bubble, such as Florida, California, Nevada and Arizona. And how do we know they are succeeding, if only until the Bernanke liquidity bubble pops again? Courtesy of articles such as this: "25 markets where flipping homes is most profitable." Nuff said.

The full-blown bubble may not be here, but what is worse is that the bubble is certainly raging in key "liquidity-pocket" MSAs, even as various other regions continue to drag the overall housing market ever lower. 

Which makes sense: in an America in which everything is increasingly polarized into two camps, and where even the Fed is schizophrenic about the future of the country, it is only logical that a New Normal housing bubble rages even as the overall housing market continues to tank.

Finally, it is quite obvious that none of these "homes" are being bought as homes, and all are basically speculative momentum chasing instruments, where everyone is certain a greater fool idiot will step up and buy the flip. And yes, we have seen all of this before and it ended in tears.

From RealtyTrac, as advice for those who just can't wait to flip that house:

Flipping  homes — buying, rehabbing and reselling for a profit usually within about 90  days — will likely become more favorable for investors in 2013 as home prices  are expected to continue climbing. And while buying  homes as rentals still offers a solid rate of return in many markets, even  buy-and-hold investors typically flip properties periodically to fund their ongoing  rental purchases.

 

RealtyTrac  selected the top 25 markets nationwide where flipping single family homes  offers the highest rate of return based on the flipper’s gross profit — the  difference between average original purchased price and the eventual flipped  sales price of a flipped home.

 

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Thu, 05/02/2013 - 12:40 | 3522827 nope-1004
nope-1004's picture

A home is a place to live.  Raise a family.  Enjoy friends visiting.  It has been warped into an "investment" by the big banks only because home equity was the last bastion of widespread tangible wealth.

Banks created the bubble, profited from it, stole hard earned wealth, and now face insolvency.  Question is, what will they attempt to steal next?  It is coming.......

 

 

Thu, 05/02/2013 - 12:42 | 3522872 BLOTTO
BLOTTO's picture

Steal next?

.

A.The ultimate prize - our 'will'...our soul.

Whatever you do - just do NOT give them that...they take everything else.

.

And with that i go out with a laugh and a smirk

Thu, 05/02/2013 - 12:45 | 3522897 Hippocratic Oaf
Hippocratic Oaf's picture

There will always be a bubble.

'honest' money seems to be a thing of the past on wall street

Thu, 05/02/2013 - 12:46 | 3522901 redpill
redpill's picture

40% of resale homes were purchased with cash so far this year. That's twice the percentage as during the housing boom. That is hot money and can evaporate as quickly as it arrived and sales volume can drop overnight by 20% or more. If interest rates ever went up, this market would crash immediately. Higher interest rates mean your cash can get yield somewhere else, and for investors using financing it eats directly into their rental cashflow equation and very quickly makes it untenable. The rug gets pulled out, investors panic and dump the properties, and we have a Class 1 shitshow.

Thu, 05/02/2013 - 12:53 | 3522929 Gromit
Gromit's picture

Surely a cash market is more stable and less vulnerable to an increase in interest rates?

Thu, 05/02/2013 - 13:04 | 3522961 redpill
redpill's picture

You might think, but the point is that people are cash buying real estate because they can't get safe yield elsewhere and need to diversify out of just stocks, so they buy houses.  Once rates go up, home prices will stagnate as fewer of the other 60% of the market will be able to afford it, and the cash will drain from real estate and into bonds or other sources of interest income.

Thu, 05/02/2013 - 13:14 | 3523005 Gromit
Gromit's picture

 A lot of hedge fund money has entered the market essentially crowding out the low end flippers because they don't seem to mind overpaying.

I can see the attraction for their investors - who like a safe yield but no longer trust the financial markets.

As for their exit strategy, well we'll just have to wait and see.

Thu, 05/02/2013 - 13:20 | 3523039 redpill
Thu, 05/02/2013 - 13:44 | 3523144 WayBehind
WayBehind's picture

I rather own investment properties than stocks. If I paid cash, I can collect rent and dont have to worry about rates or the market.

Thu, 05/02/2013 - 14:35 | 3523384 PlausibleDenial
PlausibleDenial's picture

Yes, but you will have to worry about the 25% recaputre rate as a function of depreciation.  I have said this before on ZH, if your effective tax bracket is less than 25% then you need to do some further calcs.  Depreciatioin =  tax deferral.  Few ways out of recapture 1.  live the life of 1031 like kind exchanges (watch out for boot),  2. utilized inter vivos gifting coupled with discounting mechanisms, or 3.  die and get a step up in basis on your rental property (step up in basis being eyed for elimination)

However, enjoy the cash flow and the pain in the ass renters:)

 

Thu, 05/02/2013 - 14:59 | 3523470 uncle_vito
uncle_vito's picture

Own orange ranches.   No PITA renters and very steady cash flow.   Packing house willl manage and pick grove.   You do not even have to be present.  www.citrusboys.com

Thu, 05/02/2013 - 15:17 | 3523548 knukles
knukles's picture

Out here in Kalifornia we've got 3 of the "hottest" areas property sales wise in them recent surveys.
Lemme tell ya' about 'em.
First, if the price goes from 40 to 44$/sq ft, that's a 10% increase ... but 6 years ago was 60 or 75 or some such shit
And second, its' all big businesses spec money/foreign etc buying up the tract, etc.
It ain't yer little Joe Sixpack man on the street, kiddies... at least best I can tell.
But then again, what do I know about anything?

 

Thu, 05/02/2013 - 21:59 | 3524994 mumbo_jumbo
mumbo_jumbo's picture

property taxes much?

Thu, 05/02/2013 - 13:26 | 3523066 DeadFred
DeadFred's picture

Late last year I bid on a trashed house (NorCal) in a nice neighborhood. Listed at 460K, foolishly I thought it might sell for less. It sold for 500K. Only cash bids were considered. Five months late the much renovated (no additions, just new cabinets, drywall, landscaping etc.) sold again for over 900K. Some investor with access to a cheap line of credit made a very nice ROI. Don't try this in Stockton though.

Thu, 05/02/2013 - 15:50 | 3523710 Catch-22
Catch-22's picture

… in South Florida plenty of South Americans, Canadians (with their $ at par w/ US) and Europeans are snapping up everything with cash. The 38 units for sale in my bldg 2 years ago are gone and I haven’t seen a flip yet…

 

…. Is it that much of a stretch to think that maybe some folks still have money and they know a good deal when they see one…

 

Thu, 05/02/2013 - 16:33 | 3523894 The Clever Guy
The Clever Guy's picture

Exit strategy? This IS the exit strategy. This is their last best hope.. It all crashes soon. Better have bullets.

Thu, 05/02/2013 - 13:14 | 3523013 Ness.
Ness.'s picture

Lest we forget - the inevitable increase in property taxes.  Here in Chicago (my friend works on the city budget), she said expect to paying 150% higher property taxes in 5 years.  Taxes in Cook County are not outrageously high now, but tack (tax) on a 150% increase and soon we're talking real money.  If rates go up and the taxes kick in - this "housing recovery" is toast.

Thu, 05/02/2013 - 14:33 | 3523367 DosZap
DosZap's picture

but the point is that people are cash buying real estate because they can't get safe yield elsewhere and need to diversify out of just stocks, so they buy houses.

The majority of Fla homes are being paid for w/cash by foreigners.

Asian,Chinese, and Russians.

Thu, 05/02/2013 - 14:44 | 3523426 tunnelvizn
tunnelvizn's picture

To reinforce this point, I know of a French national that has bought over 1700 homes in the Orlando area .  These are being renovated/updated for the rental market .  That is just one person/"business entity" .  There are a huge amount of houses that are located around this area that are foreign owned .  Not hard to see that europeans are putting their money in the US in more than stocks and bonds . 

The real "real estate" market is flatlined otherwise .  Not much movement in homes - just houses .  Good homes in good locations languish . 

Thu, 05/02/2013 - 17:12 | 3524035 Herd Redirectio...
Herd Redirection Committee's picture

No, they're not putting 'their money in the US', they are SPENDING THEIR USD.

Thu, 05/02/2013 - 13:09 | 3522981 WTF_247
WTF_247's picture

Not really - cash buyers can blow out at any point - there is no mortgage holding them back.  If they thought there would be a prolonged dip they will aggressively get out.

Thu, 05/02/2013 - 13:56 | 3523193 Mugatu
Mugatu's picture

Did you ever notice how all the places where flippers thrive are usually places that are chock full of douchebags who don't like to work?  California douchebags, Miami want-a-be's, etc...  All of these places would be last on the list of hard working populations.  These are places and people who think about their next tan before they think about their next mortgage payment.  In order to get back into the real estate bubble, you have to be someone who is divorced from reality - perfect for SoCal or South Beach mind. 

Thu, 05/02/2013 - 16:56 | 3523981 mkkby
mkkby's picture

@blotto:

"A.The ultimate prize - our 'will'...our soul.

Whatever you do - just do NOT give them that...they take everything else."

Long gone.  Witness the zombie hordes wandering aimlessly around a mall, walmart or big box.

Thu, 05/02/2013 - 12:44 | 3522882 jbvtme
jbvtme's picture

your soul?

Thu, 05/02/2013 - 13:58 | 3523203 CrashisOptimistic
CrashisOptimistic's picture

And again:

 

Here is the housing recovery:

http://research.stlouisfed.org/fredgraph.png?g=7iv

 

Just barely reaching the TROUGH of late 1960s sales numbers, with 50 million more people alive and mortgage rates a fraction of what they were then.

Thu, 05/02/2013 - 12:44 | 3522886 Dr. Richard Head
Dr. Richard Head's picture

What will they attempt to steal next?  Jim Rogers believes, as well as many around here, it will be 401ks and IRAs.  I tend to agree. 

"We're from the government and we are here to help you save for retirement by guaranteeing our retirement....I mean your retirement by giving you government debt in place of those dirty stocks.  See?  We love you dearly.  Carry on."

Thu, 05/02/2013 - 12:50 | 3522918 BLOTTO
BLOTTO's picture

They want to turn us into flies...

.

Don't think; just do it > morals.

 

Thu, 05/02/2013 - 13:24 | 3523048 prains
prains's picture

as a house builder, why in god's name would anyone be in a flip market where the average profit is $6,162.00. Your margin is a badly poured sidewalk to the front door, screw that up and you're selling at a loss, all day long.

Thu, 05/02/2013 - 17:52 | 3524192 Blano
Blano's picture

I know it makes no sense, but I have a friend who is an agent/builder who says the Detroit market is just nutso right now.  She's closing in 2 weeks on a house she fixed and flipped....asking price $139,900, sale price $147,000 (best deal for her).  She had 10 offers all over ask with 3 days of list.

Thu, 05/02/2013 - 13:40 | 3523126 sodbuster
sodbuster's picture

If the worthless, parasitic, leeches known as politicians can tax it, then you don't really own it, do you?

Thu, 05/02/2013 - 18:55 | 3524354 Silver Bully
Silver Bully's picture

'It has been warped into an "investment" by the big banks only because home equity was the last bastion of widespread tangible wealth.'

+1000 this.

As a former Floridian, I can attest to Tampa's real estate market activity being 6 feet under. Oh wait, I'm sorry, I thought you meant actual families looking for homes. That turnover is only dead as a door nail if you exlude investors buying up homes in an attempt to rent or flip them. They most often don't find real home owners, and often reflip to other investors.

The problem of finding homeowners with actual jobs that can afford to pay for the home has never gone away in this particular market.

Fly-by-night investors do not a housing recovery make.

Sat, 05/04/2013 - 04:26 | 3529731 jaffa
jaffa's picture

The ultimate effect on owners who bought before the bubble formed and did not sell is zero. Those who bought when low and sold high profited, while those who bought high and sold low or held until the price fell lost money. This redistribution of wealth, it is also argued, is of little macroeconomic significance. Thank you.
Luxury Valley Homes

Thu, 05/02/2013 - 12:32 | 3522832 djsmps
djsmps's picture

I'm glad to see Detroit made the list.

Thu, 05/02/2013 - 12:54 | 3522887 Kirk2NCC1701
Kirk2NCC1701's picture

Turnkey solution style of property management companies are buying from auctions, clean it, put in a tenant, and then flip it to an investment-buyer.  From out of state/country.  They make the bulk of the profit up front (quick $10k), and get a monthly fee for 'managing' the low-income properties.  If there is tenant 'churn' (turnover), they get the rental fee for new tenant.  Not sure that these 'investors' make the advertized 20% annual ROI (maybe 5-10%), but I do know that some of these companies do extremely well.

The banks and the City need to level tons of these places --> eliminate excess capacity and eyesores -->  Get money from Bernanke, create Leveling + Greening jobs!

Need moar Destruction & Construction jobs right here in the US, not Iraq, Afghanistan, etc.  Drone, bomb & build, baby!

Thu, 05/02/2013 - 13:20 | 3523032 Joe Davola
Joe Davola's picture

One could flip a $10,000 inner city beauty for a quick $800 profit.  Methinks the Breaking Bad route would be more lucrative.

Thu, 05/02/2013 - 13:28 | 3523074 Kirk2NCC1701
Kirk2NCC1701's picture

$800 profit?  ROFL! 

Well connected realtors snap up auction sales for $5,000, flip to Property Management Company for $10,000-15,000 (quick $5,000-10,000 profit!).  They then clean it, maybe paint if and do some minor repairs for a few thousand, and sell it as a rental to an out-of-state/country investor for $30,000.  Also a quick profit ($15,000).

Thu, 05/02/2013 - 12:33 | 3522834 BliptoP3
BliptoP3's picture

Detroit is on the list!  I can afford a house in Detroit!  I'm all in.

Thu, 05/02/2013 - 14:08 | 3523245 DosZap
DosZap's picture

Detroit is on the list! I can afford a house in Detroit! I'm all in.

Do you have the GE Mini Gun that would be needed to survive?.

Thu, 05/02/2013 - 14:31 | 3523356 Rick Blaine
Rick Blaine's picture

As much as I hate these movies, this bit gets me every time...

http://www.youtube.com/watch?v=x0dJm9ec2lU

 

 

Thu, 05/02/2013 - 12:33 | 3522835 maskone909
maskone909's picture

i wonder what would hapen if they penalized those who sold properties outside of 18 months of purchase?  a home is a place to live.  now my family is screwed because a bunch of assholes rigged the market and totally distorted the prices of houses.

Thu, 05/02/2013 - 12:37 | 3522853 Mojeaux18
Mojeaux18's picture

Don't worry.  They'll get screwed AGAIN when this bubble pops.  Imagine buying a house for 270K to make 300K and being stuck with it when it's worth 170K.  Then we'll be able to buy again.

Thu, 05/02/2013 - 12:44 | 3522889 maskone909
maskone909's picture

lol yeah that would be a tough pill to swallow.  i really dont have anything aginst making money.  but i see housing and employment as the foundation for our economy.  and the beat goes on

Thu, 05/02/2013 - 13:11 | 3522993 toady
toady's picture

They won't get screwed. You forget that these are corporations doing it this time. They will get bailed out and your taxes will go up to cover
Their loses.

If an individual trys it, sure, they will get hammered, but the bulk of this hot money is coming from wall street companies helping each other out by shuffling foreclosures back & forth.

Thu, 05/02/2013 - 13:54 | 3523185 chdwlch1
chdwlch1's picture

Only the financed investors in recourse states will get screwed.  Investors that were financed in a non-recourse state will simply walk away and take the credit hit... 

Thu, 05/02/2013 - 12:38 | 3522860 funthea
funthea's picture

They already do... Capital Gains tax.

In California, must live in home 2 out of 5 years to be exempted from it.

Thu, 05/02/2013 - 14:18 | 3523298 Howard_Beale
Howard_Beale's picture

That's a federal tax deal.

Thu, 05/02/2013 - 12:49 | 3522916 shovelhead
shovelhead's picture

Would you call it the Anti-Lemming Act?

Thu, 05/02/2013 - 15:35 | 3523641 jpalm
jpalm's picture

So your solution is to have the government punish people for selling something that they own? Blame the assholes that rigged the market. In the meantime, I'll be damned if someone is going to tell me that I can't sell something that belongs to me. 

Thu, 05/02/2013 - 12:33 | 3522837 hampsterwheel
hampsterwheel's picture

Just keep stacking - everything else is manipulated higher - only the PM's are being driven down as they are the enemy --- oh BTW - don't buy at APMEX - they are in on it - check out their SVP call PM manipulation a "conspiracy"  -(2:30 min mark)  either he is an idiot or he and APMEX are in on it.

https://www.youtube.com/watch?v=9FFbp8l4ruA&feature=player_embedded

Thu, 05/02/2013 - 13:05 | 3522967 Thisson
Thisson's picture

He's right in the sense that PM markets are manipulated no more nor less than anything else.

Thu, 05/02/2013 - 13:14 | 3523010 Bay of Pigs
Bay of Pigs's picture

That would be moar not less.

Thu, 05/02/2013 - 12:40 | 3522838 Spaceman Spiff
Spaceman Spiff's picture

I have been looking at buying <$50k turds and making them habitable. Even if the market collapses it will be in the price range for some people without much of a price drop.

Any profits from a flip goes into gold and/or farm land.

Thu, 05/02/2013 - 12:35 | 3522844 ParkAveFlasher
ParkAveFlasher's picture

All this means is that there is a still a heckuva lotta money being laundered through the usual conduits, which have solidified.

Thu, 05/02/2013 - 12:38 | 3522850 Mercury
Mercury's picture

This Just In !!

 

Location
Location
Location

Thu, 05/02/2013 - 12:38 | 3522859 GrinandBearit
GrinandBearit's picture

Must be a realtor.

Thu, 05/02/2013 - 13:08 | 3522898 Mercury
Mercury's picture

...or a reality

After the housing bubble (1.0 if you prefer), real estate in the best, most established locations didn't drop nearly as much as the national average while prices for McMansion developments in the middle of nowhere dropped the most.

I'm guessing that the majority of the places in the above list are somewhere in the middle: they were speculative enough markets to have suffered a big drop after 2006 but decent enough places to qualify as babies who got thrown out with the bathwater. That makes for the biggest trough to peak spikes. (Looks like lots of decent locals in big bubble states like FL and CA - same idea).

...plus or minus government thumbs on scales of course.

Thu, 05/02/2013 - 12:37 | 3522854 GrinandBearit
GrinandBearit's picture

Usually a bubble pops and people ignore it for a long time before pumping it back up.  I think this is the first time in history when an asset bubble popped and the sheep went right back in and re-inflated again... with government help of course. 

Thu, 05/02/2013 - 12:45 | 3522890 mayhem_korner
mayhem_korner's picture

 

 

Son of Ponzi.

Thu, 05/02/2013 - 14:13 | 3523271 NihilistZero
NihilistZero's picture

To be accurate it's not really the sheep inflating it.  It's the specuvestors.  The FED WILL protect BofA and Chase.  Your neighboorhood flipper, not so much...

Thu, 05/02/2013 - 14:48 | 3523438 Almost Solvent
Almost Solvent's picture

Bingo. Flip the houses off of the bank's spreadsheet and onto the flipper's spreadsheets.

 

Once the banks have offloaded enough, look out below.

Thu, 05/02/2013 - 15:04 | 3523490 NihilistZero
NihilistZero's picture

If we're ever to have any type of recovery this has to happen.  Once residential housing is reintroduced to price discovery and the deflation that will go with it, people can start spending their money in the community on goods and services instead of debt servicing.

Thu, 05/02/2013 - 12:37 | 3522856 alien-IQ
alien-IQ's picture

California and Florida make upe 68% of that list. This is fucking laughable.

Thu, 05/02/2013 - 13:57 | 3523201 chdwlch1
chdwlch1's picture

California (parts of), Florida, Nevada, Arizona...non-recourse states.  Any financed investor wouldn't take the risk in another state.

Thu, 05/02/2013 - 12:40 | 3522868 Spastica Rex
Spastica Rex's picture

Well, this time it's different - clearly. Must be.

Thu, 05/02/2013 - 12:41 | 3522871 alien-IQ
alien-IQ's picture

isn't it always?

Thu, 05/02/2013 - 12:40 | 3522870 mayhem_korner
mayhem_korner's picture

 

 

This game is called The Bigger Fool.

Thu, 05/02/2013 - 12:44 | 3522880 Cognitive Dissonance
Cognitive Dissonance's picture

What's the ante down payment to get in?

Thu, 05/02/2013 - 12:53 | 3522932 mayhem_korner
mayhem_korner's picture

 

 

I think these are cash deals by spec dealers.  They're hoping the leveraged 3% down crowd will return, no doubt.

I remember in '07 settling on a house for which the HUD statement showed the original buyer - who was caught up in the jubilee and plunked down their bet in Jan '06 but never lived there - having to pony up $140K to make settlement.  I'd never seen a statement where only the seller's side showed a loan.  Apparently, those stories haven't made their way to CA and FL and Vegas as yet. 

Thu, 05/02/2013 - 12:45 | 3522891 Zer0head
Zer0head's picture

some games of TBF have lasted years and years and lots of $$$ have been made

sadly those late to the party end up getting skinned though in this era that would be the taxpayer

 

Thu, 05/02/2013 - 12:42 | 3522874 reader2010
reader2010's picture

"The American way of life is non-negotiable." - dick cheney 

Thu, 05/02/2013 - 12:44 | 3522884 Spastica Rex
Spastica Rex's picture

And Blessed by God®

Thu, 05/02/2013 - 12:46 | 3522904 reader2010
reader2010's picture

until it wasn't.

Thu, 05/02/2013 - 12:42 | 3522878 Cognitive Dissonance
Cognitive Dissonance's picture

Now that's flipping funny.

Thu, 05/02/2013 - 12:46 | 3522905 Tsar Pointless
Tsar Pointless's picture

I know it flipped me out.

Thu, 05/02/2013 - 12:43 | 3522881 Aaron Burr
Aaron Burr's picture

No worries... Speculate away with nearly free money, leverage it to the hilt, package it into MBS's (AAA rated of course to be pawne off to pensions) and do it all on a scale that poses systemic risk to the global economy--- we can just print our way out of it so the bankster class loses nothing. Rinse and repeat.

Thu, 05/02/2013 - 13:41 | 3523128 Alex Kintner
Alex Kintner's picture

 Isn't it Bernankster who is buying up all the MBS? Using the taxpayer as the ultimate fall guy when Housing Bubble II pops.

Thu, 05/02/2013 - 12:43 | 3522883 Tsunami Wave
Tsunami Wave's picture

I can't believe my beloved Orlando, FL is #1 on the list.  Recently I visited there... I have no idea the hell why, but there were so many new-home constructions going on.  A lot of former forest, orange & citrus groves, and undeveloped land... all turned over now for further construction of new homes.  It made me utterly angry.  This place was hit very hard since 2008, there are still a lot of forclosure/for sale signs everywhere, and that was happening. Wow.

Thu, 05/02/2013 - 13:04 | 3522963 shovelhead
shovelhead's picture

Beloved Orlando?

Birthplace of Mouseketeers in Rehab.

Thu, 05/02/2013 - 13:27 | 3523069 Tsunami Wave
Tsunami Wave's picture

That's technically Lake Buena Vista or Kissimmee.  Orlando is a great town, there so much more to it than Disney World.. I hope more northerners don't get the idea to move down there with there liberal-progressive agendas and stay in New York City or California and not damage the city any further than it already has.

Thu, 05/02/2013 - 14:54 | 3523451 Almost Solvent
Almost Solvent's picture

Coco Beach - i.e. Orlando's Beach.

My wife's family has a condo one block from the beach in Coco Beach. Decent, handed down from her gandma, but trust me that every NYer is planning on their golden years in FL or NC. Why pay NY taxes in retirement?

Say what you will about the South, but it's where the snowbirds flock!

Thu, 05/02/2013 - 15:53 | 3523726 Tsunami Wave
Tsunami Wave's picture

I hate those people.  Go to Kalifornia.  The weather is 'Nicer' there, and they'll be right at home with the high taxes, high cost of living, the most beautiful people plastic surgery can buy, and where they'll all think alike.

Thu, 05/02/2013 - 16:49 | 3523957 PKF
PKF's picture

What do you really want?  Go ahead and secede already.  Or is a civil war you have in mind? 

All of this 'them vs. us' crap is childish. 

You can have your humidity and large bugs...really.  Not everyone thinks FL is some great place to live....especially in the summer.  Plus all of the bible-thumping....it wakes most of us from our sleep.

Thu, 05/02/2013 - 12:44 | 3522888 firstdivision
firstdivision's picture

Ben, check it out.  Equities are at all time highs, the Unemployment rate is falling, unemployment claims are falling, and the housing market has recovered.  Time to unroll the "Mission accomplished" banner and pull the punchbowl.

Thu, 05/02/2013 - 12:47 | 3522908 Zer0head
Zer0head's picture

he will likely take a bow before Jackson HOLE  leaving it up to Ms YELLING to close the bar

Ben's no fool

Thu, 05/02/2013 - 13:19 | 3523030 toady
toady's picture

If he's smart.

Learn from the old man. Pull a Greenspan.

Thu, 05/02/2013 - 13:26 | 3523065 yogibear
yogibear's picture

Bubble Bernanke realizes his college thesis was BS crap. He outta here before the SHTF.  They will be all yelling at Yellen. She will get blamed.

 

Thu, 05/02/2013 - 12:45 | 3522894 Richard Head
Richard Head's picture

I'm sure the NAR spokesman said "it's a great time to buy!" Then again, I might be thinking of last year, or the year before.

Thu, 05/02/2013 - 12:46 | 3522902 Cursive
Cursive's picture

That's nice.  Someone's dream has been made in Detroit.  Not the residents of that beautiful city, mind you.

Thu, 05/02/2013 - 12:46 | 3522903 Kirk2NCC1701
Kirk2NCC1701's picture

Caveat Emptor (Buyer Beware):  Proceed with caution -- we've been Flipped Off before.

Thu, 05/02/2013 - 12:51 | 3522923 Gromit
Gromit's picture

Case Shiller takes no account of fix up expenses of flipper homes, therefore will natuaually overstate gains in markets where flip homes are a material proportion of total sales.

A typical flip budget is 15% of purchase cost for renovation, and another 10% for admin and finance cost.

So a flip home must yield a sale price up 25% to break even, plus maybe 10% profit for the flipper's time/expertise. On this home Case Shiller will show plus 35% so you can easily see that a large proportion of flip homes will show an apparent impressive increase in prices. 

Thu, 05/02/2013 - 14:44 | 3523424 andyupnorth
andyupnorth's picture

"Gross Profit Percentage"!!!

BWAAAAHAHAHAHA!!!

It's totally meaningless!!!!

Thu, 05/02/2013 - 12:57 | 3522941 buzzsaw99
buzzsaw99's picture

Things that crawl and things that fly

Things that creep around on the ground

And they say the ghost of Franklin Raines

Gets up and he walks around...

Thu, 05/02/2013 - 12:58 | 3522946 nightshiftsucks
nightshiftsucks's picture

I live in San Ramon Ca,almost back to the highs and houses are selling like hot cakes,might be time to sell.

Thu, 05/02/2013 - 13:27 | 3523071 yogibear
yogibear's picture

Get out while you can. Sell when everyone is buying.

Fri, 05/03/2013 - 09:38 | 3526429 Joseph Jones
Joseph Jones's picture

How do you spell California?  Shitehole. 

Born and raised and lived there 52 years.  Don't recognize it when I visit now. 

Thu, 05/02/2013 - 12:59 | 3522948 CheapBastard
CheapBastard's picture

China put a stop to Flippers...i read you cannot get a loan after you have bought two houses......here, it's Flipper's Paradise with a sucker around every corner.

Thu, 05/02/2013 - 13:00 | 3522952 Seasmoke
Seasmoke's picture

Some states allow casinos, some do not................... No different with house flipping

Thu, 05/02/2013 - 13:08 | 3522975 Son of Loki
Son of Loki's picture

With property taxes, maintenance and insurance costs going up it may become more difficult to flip. But I guess it's ok since there's always the generous taxpayers to bail them out.

Thu, 05/02/2013 - 13:08 | 3522980 shovelhead
shovelhead's picture

I have to admire peoples devotion to real estate as a wealth generating vehicle.

You would almost think the NAR promises 72 virgins with every purchase.

Thu, 05/02/2013 - 13:10 | 3522990 Thisson
Thisson's picture

Well, why not buy when you don't have to put any of your own money down?

Thu, 05/02/2013 - 13:12 | 3523001 Downtoolong
Downtoolong's picture

Stockton, CA.

Good news, your home went up in price. Bad news, the city it's in just went bankrupt.

Yea, this all makes so much sense. Welcome to Bizarro Land, aka The Tragic Kingdom.

Thu, 05/02/2013 - 13:13 | 3523004 observer007
observer007's picture

ALL WARS are BANKERS' WARS

 

Mike Rivero details the real reason behind all major wars of the last few hundred years - The International Bankers. Prepare to look again at historical events as Mr Rivero unveils the hidden hand's involvement in the destruction and enslavement of the entire population of the Earth.


http://homment.com/bank-wars

Thu, 05/02/2013 - 13:19 | 3523029 Bay of Pigs
Bay of Pigs's picture

Indeed. Here is Lew Rockwell on "War and the FED".

http://www.youtube.com/watch?v=Tl9lS5k7H5M

Fri, 05/03/2013 - 09:35 | 3526410 Joseph Jones
Joseph Jones's picture

There is old art work depicting the hook nosed jew banker whispering into one king's ear, then the oppposing king's ear, exactly the same thing: "I have reliable sources who tell me king X plans to attack you any moment.  If you don't attack him prior, your life and your kingdom is in jeopardy."

Sound like WMD? 

Same as it ever was. 

What happens when you fight war?  You need to buy weapons, feed and cloth armies.  Who runs the bank to supply the money for both sides?  What could be easier business than watching blood spilled and making money on every drop? 

The Rabbis said, and still maintain::::::::::::::::::::The jews who Hitler killed got exactly what they deserved for turning their backs against the Rabbis.

Thu, 05/02/2013 - 13:14 | 3523007 Catullus
Catullus's picture

Nashville?!

Great town. But damn.

35% flip on 9% in price increase. That's like 4x for painting a house, replacing a few faucets and maybe a new fridge.

I see why SHW stock is up like 250% since 2008. A can of paint is like the highest yielding thing you do right now.

Thu, 05/02/2013 - 13:14 | 3523008 azengrcat
azengrcat's picture

Buy dumps, flip to foreign rubes, profit.

Thu, 05/02/2013 - 13:31 | 3523088 yogibear
yogibear's picture

Lot's of overseas money. Sell to the fools. Let them try and rent it. The property taxes and fees will eat them up. Good thing they paid in cash. Their stuck loosing.

Thu, 05/02/2013 - 13:26 | 3523064 MachoMan
MachoMan's picture

Didn't expect to see memphis on there...  the place is a total shithole...  legendary levels of government corruption...  no productive base in which to tax or otherwise maintain critical infrastructure...  it's a border town so people can avoid the tax man if they choose...  in order to get anyone to visit, they have to keep an orwellian police presence...  total FUD.

Thu, 05/02/2013 - 13:29 | 3523078 krugergate
krugergate's picture

If you want to see a housing bubble check out Alberta where in Calgary the average single family home is $450,000 which gets you a 3 bedroom 2 bath house on a 35' lot. Thanks to the oil sands anybody that can turn a wrench makes a $100,000 per year - more if you are prepared to work in a "camp" and fly home every other week after working 14 days straight. 

 

The same home in the US would be 150,000 - but no bubble here. Go leafs!

Thu, 05/02/2013 - 14:29 | 3523270 Floodmaster
Floodmaster's picture

Canada is suffering from dutch disease, ban private vehicles that do less than 30 mpg (25% EU / 75% US) and this country is economically dead.

Thu, 05/02/2013 - 19:45 | 3524507 NaN
NaN's picture

More efficient machines cause the economy to be destroyed? 

Would the economy and life in general be better if lots of people rode around on loud, inefficient 2 stroke scooters, like in Paris? 

 

Thu, 05/02/2013 - 13:44 | 3523141 dizzyfingers
dizzyfingers's picture

"They'll get screwed AGAIN when this bubble pops"...

NO, WE WILL GET SCREWED BY MORE QE, DOLT.

Thu, 05/02/2013 - 13:46 | 3523149 Cheeseus Sonofdog
Cheeseus Sonofdog's picture

I live in Palm Beach County, Fl. Many of the lower priced properties are up 100% to 200%. I assume the buyers think the old highs will be reached again. While at the low homes were down 50%, they were still up hundreds of percent from the start of the bubble in 1998. Homes at these levels are still absurdly priced, and thinking they will double again in a year is ridiculous. These investors are gonna be shocked when the property taxes go up a few grand to reflect the rising prices. If we get another hurricane, the insurance will skyrocket again. HOA's are gonna hit landlords. The worst thing is that 80% of the buyers intend on renting. There is going to be a flood of rentals and rents are gonna plummet. The median wages down here is under $50k a year. Plus, the County has changed to a more immmigrant/Latino community. They don't mind shacking up many people in the same unit. People with these wild dreams of becoming a Landlord Tycoon are going to face a harsh reality....

Fri, 05/03/2013 - 09:27 | 3526355 Joseph Jones
Joseph Jones's picture

Sold home in Sonoma County CA early 2007.  While "For Sale" sign was posted, Latin across the street parked up to seven commercial vans and trucks with full commercial signage plastered all over, in direct violation of the law.  His crews appeared every morning and evening, piling into the vehicles.  His business was emergency cleanup.  He would wash his waste into the public sewer system.

I forwarded dozens of images to the local code enforcement, with direct quotes of several codes violated, who did nothing till I called the police the third time. 

They actually told me and IIRC put in writing they could do nothing because their supervisor position was unfilled.  Too busy watching Oprah reruns, planning vacations, and where to eat lunch.

Did I mention he converted part of his garage for commercial use? 

His employees were all illegal, ran like cockroaches when they saw my camera.  Oh, they all wore uniforms too.  Can you picture this shite in a purely residential area?  Anyone thinking this is not perfectly planned to convert this to a 3rd world shite hole is epic stupid.

I used to somewhat respect PD.  Now I view them all as simply highly paid and highly trained brain dead robot goons for the eilite scum of the earth like Pelosi, Feinstein, McCain, Lindsay, etc, etc. 

Thu, 05/02/2013 - 13:48 | 3523160 nakki
nakki's picture

What's the average NET profit Gross profit only counts for Amazon

Thu, 05/02/2013 - 13:49 | 3523166 IridiumRebel
IridiumRebel's picture

Fairfield CT....just about last on the list of counties in home sales. I picked a real winner. The market sucks here. Dropped the price by 10% so far with one offer falling through cuz she lost her job. Connecticut is beautiful and the people are really nice but in the 11 places I have lived, its government is the worst.

Thu, 05/02/2013 - 14:47 | 3523436 mayhem_korner
mayhem_korner's picture

 

 

Amen.  Newtown for me.  How the sound-minded founders let the socialists invade this beautiful place is beyond me.

Thu, 05/02/2013 - 15:04 | 3523492 IridiumRebel
IridiumRebel's picture

i'm down in Bport. They have Jeffersonian plaques and sayins all over and the libtards are just pissing all over it. Sad, but I am leaving. As soon as I heard I had to register any and all firearms and submit to background checks for ammo?....fuck you. 

Thu, 05/02/2013 - 15:09 | 3523515 knukles
knukles's picture

I departed CT about 10 years ago for CA.
And so far, no regrets, but for the food.
Can't beat the food around the tri-state area

Thu, 05/02/2013 - 15:21 | 3523570 IridiumRebel
IridiumRebel's picture

I'd kill to golf with you and I do not even golf.....

Thu, 05/02/2013 - 13:52 | 3523175 ebworthen
ebworthen's picture

Incessant reverse mortgage ads on T.V. (Henry "Fonzi" Winkler, Fred "Pres" Thompson, Robert "She slipped" Wagner)

Heard a Quicken loans advert on the radio today (you know, the thing with AM/FM?): 

"If your home has lost value, for example, you bought if for $300K and it is now worth $150K, we can help!  The government HARP program will get you a new loan at a low interest rate!"

The house flipping shows are back on cable t.v. too; wheeling and dealing.

Hedge funds buying houses to rent out at exorbitant rates.

Labor participation at all time lows.

Food Stamps at all time highs.

FED printing non-stop.

"Bubble?"

"Where?"

Ack!

Thu, 05/02/2013 - 15:06 | 3523502 WillyGroper
WillyGroper's picture

OK. You made me choke on Robert "SS" Wagner. LOL

Thu, 05/02/2013 - 15:11 | 3523522 knukles
knukles's picture

Prototypical Bond Guy Joke;

 

Know what kinda wood don't float?
Natalie

Thu, 05/02/2013 - 14:11 | 3523248 YHC-FTSE
YHC-FTSE's picture

Some will try to do a decent job of doing up a house before selling, but look at the language, "flipping", and the general "make money quick" attitude.  What's the difference between "flipping" a house, and buying a clunker, giving it a hillbilly tune up then selling it on to an unsuspecting sucker? You could make money like that, but I couldn't do it in a million years and look at myself in the mirror.  Is this what civilisation has come to? Encouraging people to make money quick with cosmetics and fraud? Fuck that.

 

I think this ties in with Mel Watt's appointment at Fannie and Freddie, where expectations are high of another subprime tsunami and its repackaged derivatives.  The FOMC announcing additional flexibility to their purchases, and the recent article about the system's shortage of "high quality collateral" under the present stressed conditions all point to a desperate attempt to jump start  the housing market. A mountain of MBS fits the bill, so I expect that the article is correct in surmising a resurgence in home buying, home improvements,  and general real estate development to get the sheep and the few wage slaves left to sign on the dotted line to give their lives to the banks. 

If this works, it'll make Bernanke a hero. When it collapses he'll be gone. If you're a fund manager, the squids will be pimping MBS again. Beware. Remember what happened the last time you trusted a AAA certified security from Wall St.

 

Thu, 05/02/2013 - 14:18 | 3523301 Cheeseus Sonofdog
Cheeseus Sonofdog's picture

It's a shame to see suckers buying a flipped house. I have seen homes with mold on every square inch. The banks make you sign a waiver to go in and the realtor won't even step inside. The Flippers buy it, spray some clorox and cover it all with killzall. They have it back on the market in a few weeks.... I just saw a home in Jupiter Fl come on the market. The whole street had cookie cutter homes built with chinese drywall in 2006. This latest for sale has all of the drywall stripped out, but the listing says the home was never completed. Yet you see from the pics it has tile, installed cabinets, bath, etc. Somebody will buy it and slap in some drywall without going over the corroded eletrical, contaminated AC, etc. 

Thu, 05/02/2013 - 14:35 | 3523382 YHC-FTSE
YHC-FTSE's picture

If the buyers of such flipped properties were going into it to make a home for their families,  that's a tragedy.  Tales like that make me sick and livid that people would do that to make money. 

Thu, 05/02/2013 - 14:17 | 3523291 asscannon101
asscannon101's picture

I have lived in Orlando for the last 7 years. When I moved here I refused to buy a house because I was well aware of the magnitude of the bubble and its eventual outcome. People actually laughed and ridiculed me for not being 'smart' enough to get in on the housing gravy train. They stopped laughing in about 2010. This is when they finally stopped telling one another that this was only "temporary" and that the market was going to turn around "any day now". Here is a little 'boots on the ground' insight: I personally know several people who have not made a mortgage payment in 2-3 years, but still live in their almost empty houses. The banks allow it because the government enabled them to. I am not naive enough to think that I am different or special, so I imagine that most others here also know 2 or 3 who are doing the same thing. It is a very common situation. Many of these houses are in shit condition and the only maintenance that has been performed is keeping the interior dehumidified by keeping the AC on. Most that went without AC for a couple of months now have black mold growing in them. Many of these houses were thrown together during the bubble years with poor construction and inferior materials, including toxic/sulphurous Chinese sheetrock. If they want to jump start this bubble into its final phase, then bring it.

When the suckers buy these dumps to re-hab them, they will probably just apply 3-4 coats of KILZ, slap on some tan paint, call in ServPro to de-stinkify the joint, dust off the 'granite and stainless throughout' and sell it as fast as they can to some even bigger idiot. You won't be able to fix them properly and still turn a profit. I don't think this will work very well or for very long. I think the end of this phase will come quickly and suddenly. Just like Wall Street before, the government will make it easy to get the loan, but it will still be impossible for the greater fools to pay the loan. Bubble, rinse and repeat. But because the precedent has been set, (housing CAN crash, Maestro Greedspan) the history of Bubble-Bust 1.0 is so recent and the painful memories so fresh in investors' minds that the rush for the exits will be brutal. Maybe I'm wrong, but none of the fundamentals supporting recovery have improved- they have ALL deteriorated. I still believe that: "You can ignore reality all you want, but that doesn't mean that reality will ignore you". "I don't care how many dogs are barking up the wrong tree, its STILL the wrong fucking tree!" "I know what is around the next corner, I just don't know how far away the corner is."

Thu, 05/02/2013 - 14:35 | 3523377 Cheeseus Sonofdog
Cheeseus Sonofdog's picture

 

I'm down in PBC. People think a $120k condo is a great deal because it was selling for $200k in 2006. They fail to realize it was only $40k in 1998 and would take months to get an offer. Meanwhile, taxes, hoa and insurance have skyrocketed. Prices were absurd a decade ago and even more so today.

I sold a place in the fall of 2006. The buyer got a foreclosure notice the next year. He is still living there and the bank just had to update the status of their foreclosure.... The person down the street just got their foreclosure tossed out. They took out $150k from Bank of America. The foreclosure sat for years. As part of robo-signing settlement they got that debt voided... House two doors down just got foreclosed after being empty for five years. House next door is boarded up because kids broke all of the windows and thieves stripped the copper. The owner only owed $30k but the bank made them move out two years ago....

 

Thu, 05/02/2013 - 14:42 | 3523416 asscannon101
asscannon101's picture

I was reading on another forum where a guy who weathered out the bust of the Texas oil patch in the 80's said that many people down there learned the hard way that you didn't buy a house until it had been foreclosed upon twice. That was when an effective 'bottom' was in.

Fri, 05/03/2013 - 08:58 | 3526228 Joseph Jones
Joseph Jones's picture

Some men'll rob with a six-gun, some men'll rob you with a fountain pen...

Thu, 05/02/2013 - 14:22 | 3523314 Bunga Bunga
Bunga Bunga's picture

The fliponomy is back!

Thu, 05/02/2013 - 14:31 | 3523355 Yes_Questions
Yes_Questions's picture

 

 

Fuck you Realty Trac for pimping this gamble.

 

 

 

 

Thu, 05/02/2013 - 14:33 | 3523372 nbsharma
nbsharma's picture

I feel sad just reading this. The common man and woman get killed in these speculations.

Thu, 05/02/2013 - 14:35 | 3523381 q99x2
q99x2's picture

Can I use a student loan to get me started?

Good thing about all this is that nobody ever has to pay for it. You only have to convince yourself that morality is worthless when compared to greed. Used to have laws to help people with their indecision. Seems to me to be a set up by non-existance to con animate matter into believing existance comes at no cost and that facts are not necessary for consciousness. Thus spake the ChairSatan's fool. 

Thu, 05/02/2013 - 14:39 | 3523401 Sach Mahoney
Sach Mahoney's picture

Hey its the new normal. Flipping is good for the economy, easy money is not inflationary, assets will always go higher, the FED and Central Government are omipotent

Thu, 05/02/2013 - 15:09 | 3523518 22winmag
22winmag's picture

Now... back to flipping ammunition for some real money.

Thu, 05/02/2013 - 15:52 | 3523691 Political_Savage
Political_Savage's picture

I would say Tyler is in over his head on this one.

This "bubble" is being inflated with cash - not lending. Not sure if anyone here understands underwriting standards, but it ain't easy to get a loan on an investment property without serious reserves and a thorough probing of the individual. It's what I do for a living. Construction loans are non-existant and rehab loans are typically short-term portfolio loans that don't exist beyond 6mo and have to be refi'd out to a conventional mortgage.

And if an investor does buy property, I would call it a safe bet against inflation. Lock in 30yr rate at sub-4%... do that a few time and then setup a commerical loan, 10yr amortizing, also at sub-4%.

If you can do it - then do it. It's profitable. If rates shoot up, what do you care, your funding is locked. You don't care about mark-to-market on the house. Your concern must be rental income and filling the houses. I've worked with a lot of people that hold anywhere from 10 - 100 properties, for years, and they are looking good. This rate environment is their best friend. One asked me why he wouldn't lever up now... so I lent him as much as possible (via individual conforming loans - punt to Fannie/Freddie for securitization) and then rolled them all into a commercial loan. $10mm nice and easy, and I take 125bps of that. Won't last long though

Thu, 05/02/2013 - 16:05 | 3523750 Cheeseus Sonofdog
Cheeseus Sonofdog's picture

Cash is a problem if this turns out to be just a dead cat bounce. Who will they sell their illiquid asset too if it crashes again? Organic buyers are not there. The whole market is investors. There is a rent bubble, and not only will these millions of recent home purchases being rented, they will compete with the millions of new apartments being built. Everyone buying thinks they will rent or flip. They have blown all of their cash. If it goes down again there is nothing stopping the bottom from falling out this time. Only the prudent savers will be around, and they will demand prices 80% below these absurd ones...

If bonds are signaling deflation, who in their right mind would blow their cash on a hedge against inflation that just went up 30% in one year? I just think it's moves like this that will make a deflationary collapse even more extreme if it turns out to be the outcome....

Thu, 05/02/2013 - 15:56 | 3523739 musket
musket's picture

Looks like a recycled list from early 2005......

Thu, 05/02/2013 - 17:38 | 3524147 usanovak
usanovak's picture

Detriot in the top 25 ... you've got to be kidding.

Fri, 05/03/2013 - 13:02 | 3527503 Ruger556
Ruger556's picture

I think you can get free houses in detroit, paint it, pull some weeds and sell for 1k, so that is technically flipping

Thu, 05/02/2013 - 18:54 | 3524352 RiverRoad
RiverRoad's picture

This means the top is in? Or this means the top is in.

Fri, 05/03/2013 - 13:01 | 3527498 Ruger556
Ruger556's picture

Ok, but taking something, and using your labor and raw materials to improve it is not exactly flipping a house like what we saw in 2005..where someone would buy a house doing nothing but close on it and re-sell it 2 months later for 10-20% more.. I mean, they did nothing.  

If I take a rusty old 68 muscle car I paid 2K for, spend countless hours, materials and additional funds to improve it, do we now have a car bubble? No.. of course not. 

 

Sat, 05/04/2013 - 02:03 | 3529668 douglas
douglas's picture

I have only one property in the U.S. (in Ft Lauderdale, FL) and yes its value has significantly increased lately. The problem is that while the rent I collect has gone up, the property taxes and insurance have also risen thereby eliminating increased earnings - still at this time I have no complaints.  As far as putting more money into real estate, I cant see doing it in the USA - I think when the imminent economic colapse finally happens, one of the only places the government is going to be able to increase its revenue (besides bank bail-ins) is through increased property taxes (which are already among the highest in the world).  In any case, ¨Buy low sell high¨ also applies to real estate and right now US real estate prices are nowhere near the lows we could see as soon as this Fed/Bankster inflated real estate bubble (limiting supply) pops.  Obviously there is money to be made ¨Flipping¨, but as far as property to hold for the longer term I believe many other places (like where I live in Spain) are a much better investment.  Property values here are still at lows, not having increased at all since the crisis began like in the US.  I recently bought a small 3 bdrm 2bath condo (1100 sq ft) right on the Med for €150k (less than $200k) which was sold new 6 years ago for well over twice the price.  The best part is that property taxes, insurance and homeowners association are only a combined $200 per month.  I´m not quite ready to put alot more into real estate with the world economy the way it is right now, but for anyone who thinks they have enough Gold/Silver and is looking to diversify into other long term investments I would certainly give this a look.  Final words, If you´re not sure then stick with Physical Metals, especially at current prices you cant go wrong.

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