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Home flipping accelerates in Southern California

  |   July 29, 2013 at 12:21 PM
LOS ANGELES, July 29 (UPI) -- Data shows Southern California is experiencing a sustained flurry of house-flipping, which is defined as reselling a home for a profit within six months.

More than 1,000 homes have been flipped each month for the past 11 months in the region, the Los Angeles Times reported Monday.

Home flipping, which reached 1,377 homes in May, has become inviting because home prices are rising so fast that the investments pay off quickly.

In the region, home prices have risen more than 20 percent in 12 months each month since January, including a peak of 28 percent in June, market researchers at DataQuick said.

Real estate agent Tarek El Moussa is creating a one-man flurry of his own. After making a $35,000 profit on a Santa Ana condominium in 2010 -- above and beyond the buying price and the cost of renovations -- El Moussa said he flipped 20 more homes in 2012 and expects to reach 50 in 2013, the Times reported.

"I made a good profit, and I saw the opportunity to do it not only once, but do it over and over," El Moussa said.

Some economists are concerned the market is overheated, which raises a red flag, given the 2009 recession began with a crash in the housing market that was preceded by high levels of home flipping.

But others say there is a difference, since tighter rules at banks include investors risking their own money in the form of down payments.

"Back then, you could buy a house without any money down. When people failed to repay their loans, it led to a cascading effect," said Richard Green, director of the University of Southern California Lusk Center for Real Estate.

"If people are acquiring houses with very low down payments, then I would be very worried," Green said.

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