Flippers Earning Money from Los Angeles Foreclosures- By: John Cutts
Flippers have returned and are now earning money from Los Angeles foreclosures. The southern suburb of Los Angeles is becoming popular to investors and home buyers because of its nearness to the city of Los Angeles and to other job locations.
Additionally, the central area of the southern suburb hosts plenty of factories and is known for blue-collar jobs, prompting families of factor workers to find housing in nearby neighborhoods.
The percentage of houses sold to flippers and other investors has soared to almost 29 percent in the fourth quarter last year, a sharp jump from 17.3 percent in the first quarter of 2004 and from 9.4 percent in the final quarter of 2006.
Local analysts also said that the recent decision of the Federal Housing Administration to suspend its no-flipping rule for one year enabled investors to resell foreclosures or nondistressed existing properties quickly. Previously, the FHA prohibited FHA home loan applicants from buying homes that have been purchased and are being resold by flippers within three months after buying.
According to a local real estate firm, Los Angeles foreclosures are among the most sought-after properties in Southern California, as these properties can be resold within 3 weeks to 6 months of purchase.
In the final quarter of last year, the top zip code with the highest percentage of flipped homes was in Watts, where one home out of every six houses sold during the quarter was flipped. The other three top zip codes were located in South Los Angeles and the others were in Willowbrook and East Compton.
Aside from the availability of lower-priced bank owned homes listings, residential properties in these zip codes are near the ports of Long Beach and Los Angeles, the Los Angeles International Airport and other manufacturing job centers.
The top ranking of California in charts of foreclosures rates by state also meant that there are lots of residential units that can be bought at distressed prices.
In March, California was second only to Nevada in foreclosure rate, and in the first quarter, it posted a total of 216,263 foreclosure filings, the highest posted by a state, and higher by 62,723 units than the 153,540 posted by second-placer Florida.
Local analysts said that Los Angeles foreclosures were not caused by overbuilding, such as what happened in the Inland Empire, but by record numbers of homeowners who took out subprime loans during the housing boom.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.