flippers and builders hugging it out right now. As Chickie baby used to say, “ it’s nervous time, white knuckler”. Every fawking guy at the gym was a flipper the last few years. By comparison, the investor wave in 2006 was tame, see below. Lots more investors got in now. a lot of institutional investors who gobbled up entry level homes. Imagine you bought a house to flip using a hard money loan, you had to belly up to the bar to get the property due to idiot competition and now you gotta hold the property or even sell at a loss. Holding and sales costs are what most hurt flippers. I usually estimate sales costs at 8% of the sale price. Capital gains taxes around 28% , lower if you are a sharp cat. And even lower if you hold it for a year. i like to plan for holding costs covering 6 months. 30 days for repairs/renovations, 30 days for marketing of the property and negotiating an offer, and 30 days for escrow. Thats how it should work. I have been involved in maybe over a thousand flips , they rarely work out that way. Six months is a safer bet. You saw what happened to Zillow, they lost $400 million flipping houses. Lol. during the good times.
Open door and Redfin are walking that same path.
Unsustainable. Irrational. Out of whack. Fed said, “oh hell nah, we pushing the muthafawking reset button”. Music is stopping, grab a chair. By the way, in most cases I recommend you do not put more than a 10% down payment when you buy. In fact go with 5% ( in most cases, however if youre old as fuck I understand a larger down to keep the payment within your fixed income budget.) remember your down payment is at risk in a declining price environment. Also, equity is not a liquid asset, you will have to borrow or sell to get your money out. Buy with a low down, take the mortgage insurance hit, then refi to get out of the MI.
Millennials were the biggest buyers of homes. Fawking something up again. The Silent Generation (90% of our board) still buying 😂