Good News for Today's CASH Investor

Foreclosure Auctions are on the Rise

Foreclosures in some markets are on the rise, according to one survey of courthouse auctions.  However, the numbers do not indicate a peak in foreclosure sales has been reached, which means that there are more opportunities for the cash investors.

Foreclosure Auction sales grew as much as 50% in some states during January 2011 as foreclosure moratoriums came to an end, sending hundreds of distressed properties back to the auction block.

California saw its back-to-bank foreclosure sales jump 51.1% between December and January.  Sales of foreclosed home to third parties in CA also rose 52.8%                                                  

Kerry P.
2/11/11

 
      House Flipping Encouraged by FHA

If you know what you`re doing, house flipping can be a prosperous undertaking. FHA lending has become very popular in the last few years, insuring loans to credit-worthy borrowers who can`t make a large down payment. In the past, the Federal Housing Administration has discouraged house flipping but in recent years, the agency has changed a rule that now encourages it, and a flipper can now make a much quicker buck.

Amanda Tetlak

2/18/11

House Flipping Wave Transforms Northeast L.A.

A wave of boutique house flippers is cashing in some of the last cheap stock in Northeast L.A. -- Highland Park, Lincoln Heights, Glassell Park. These developers are employing a sort of IKEA philosophy of real estate development -- providing good design at cheap prices in smaller houses that might anywhere else prove unaffordable for the average person. 

These developers are profiting during a period of depression in the housing market when, at the same time, loans are difficult to come by. The circumstances are ideal for house flippers because the average person can't get a loan to cash in on the cheap prices...but real estate developers with access to capital can. 

In this particular area, it means gentrification is being pushed forward at a faster pace -- and in some instances, more shoddily -- than might happen with organic, bottom up change

By Alex Schmidt

CASH only home Sales rise in California

ALL CASH Buyers grabbed a record 30.9% share of CA house and condo sales in Jan.  In Southern California’s most expensive communities, CASH deals now account for as much as 2/3 of home sales.  CASH talks and it’s speaking loudly in California real estate these days, even in the nicest parts of town.

CASH activity has been brisk for months in foreclosure-ridden areas such as Riverside and San Bernardino.  But now, the CASH Buyer has become a major player in Southern California’s most expensive communities, where CASH deals account for as much as 2/3 of home sales.

“A lot of people think housing will outperform other financial investments,” said Andrew LePage, a DataQuick analyst.  “This is just a place to park their money.”

In the Southland’s A$1M and up market, 29.2% of buyers paid cash last year – the highest percentage since 1994, DataQuick statistics show.  For homes selling for $5M and up, 62.2% paid cash.

Overall, CASH deals constituted 27.8% of Southern California home sales in 2010, the most since DataQuick began tracking the market in 1988.  It’s also more than double the 13% average for CASH sales over the last decade.

The shift toward CASH purchases stated when foreclosure became a significant factor in the market, said Gary Painter, director of research at the USC Lust Center for Real Estate.  That’s because investors buying properties on the courthouse steps don’t go looking for mortgages.  “There have always been ALL CASH Investors who think they can go in and flip a home, there are just more of them now,” he said.  While investors are counting on home prices to rise, they should also be prepared for a long wait, USC’s G. Painter cautioned.  “My sense is that we are in a flat period.  I expect we’ll be there for another 12 months as the inventory gets pushed out in the foreclosures that banks are holding and as they dispose of them.”

Chris C., a broker in Corona del Mar, said well heeled buyers are using cash to acquire investment properties and second homes or to better their portfolios.  “Buyers are looking out 10 years and buying a trophy property for 40% off its price” before the housing downturn, Chris said.

“The smart money is ahead of the game and buying before the summer selling season when they will have competition,” he added. 
 
        Cash Buyers Picking Up Best Deals
        In Southern California Real Estate

Southern California's real estate market appears to be heading in the right direction, with sales up 5% over a year ago, and median sale price growth of 14%. Foreclosure resales still account for over a third of sales, and some of the best deals right now are being had by CASH Buyers.