The California real estate market has been a bit underwhelming in 2016. A new report out of PropertyRadar shares some details about the California housing market as of May. According to the report, single-family homes and condominiums sales went up 2.2% in May over the previous month, but sales were down 4.7% from May 2015. At the same time, the median home sale price was $430,000 in May, marking no change from April, but that marked a 6.2% increase from the $405,000 median in May 2015.
The conclusion to be drawn here is that while home prices are going up, inventory remains low, which is reducing both the motivation and the opportunities for a lot of potential buyers. Prices are simply too steep for many people in California, which is slowing down house flipping this year.
The report noted that sales increased 4.5% in May compared to April, but were down 1.1% compared to a year ago. PropertyRadar found that flip sales made up 3.1% of all home sales in May, which tied with April.
The report also noted an interesting trend. In May, 20.7% of all home sales were cash sales. Of those, 36.4% of homes bought with cash were purchased by trusts. PropertyRadar attributes a large portion of the sales to a new trend that they have termed Millennial Phantom Ownership. Basically, parents and grandparents of Millennials have taken to buying them starter homes or condos, both to help their children get on their feet and to safely invest their own excess cash.
House flippers might be wise to focus on these phantom Millennial owners and also look for up-and-coming markets where prices have not gotten quite so high. The other option is to turn to luxury house flipping, but that obviously requires quite a bit of capital.
Wherever you’re focusing your attention in the current marketplace, ZINC Financial has house flipping loans that can help you achieve your goals. Our residential rehab loans offer competitive rates and can be funded in just seven to ten business days. Give us a call today at 559.326.2509 to learn more about our fix and flip loans and current promotions.