Home flipping frenzy returns to So Cal real estate market

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By Cale Ottens
July 29, 2013, 5:00 a.m.
Like most real estate agents, Tarek El Moussa saw much of his livelihood evaporate in the housing bust.

But with prices beaten down, El Moussa also started seeing bargains everywhere. He bought a Santa Ana condo for $115,000 in 2010, made modest renovations and flipped it for a $35,000 profit. Last year, he repeated the process 20 times and this year expects to flip 50 homes.

"I absolutely loved it," El Moussa said about that first house flip. "I made a good profit, and I saw the opportunity to do it not only once, but do it over and over."

With Southland home prices rising in a fast-paced recovery, home flippers have returned to the market in force. In May, investors flipped 1,377 homes — a level not seen since the height of the housing boom, when investors turned over 1,394 homes in June 2005, according to real estate research firm DataQuick. The firm defines flipping as buying and reselling a home within six months.

The frenzy has brought new interest in home flippers as celebrities, after earlier TV reality shows featuring them went the way of the housing market. "Flip this House," on A&E, was canceled in 2009. Bravo's "Flipping Out" first aired in 2007 but switched gears after the second season to focus on interior design. El Moussa has turned his experience into a new show, "Flip or Flop," which premiered on HGTV in April.

After the crash, experts — in hindsight — pointed to get-rich-quick home flipping as a missed warning sign before the housing bubble burst. But whether the return of flipping constitutes cause for alarm remains a murkier question.


more

http://www.latimes.com/business/la-fi-house-flips-20130729,0,6412098.story

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1. Seriously doubt 'flipping' had any effect on the housing crash

Adjustable mortgage rates, lax credit approvals, default swaps.. Flipping seems like a legitimate business. They purchase houses at auctions, update them to livable standards, and resell for a decent profit. I don't see anything wrong with that.

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2. +1. That's how our system works; you can wish it was more fair,

but the system just is what it is. I see no reason to condemn people like the guy in the OP for trying to make a good living by buying and selling properties on the free market.