House Flippers Could Be Contributing to L.A.'s Housing Crisis
There's a lot of blame to go around when it comes to Los Angeles' housing crisis. Take your pick: greedy landlords, upscale developers, NIMBYs opposed to greater density, chickenshit political leaders and newcomers.
Folks and, often, real estate investment trusts buy homes and then add the requisite granite-counter kitchen makeover, stainless-look fridge and drought-resistant landscaping for the easy score. A property that might have been remotely affordable now lists for $200,000 more.
That's not good for one of the least affordable housing markets in the nation.
Trulia reported in 2014 that a median-income family in L.A. can only afford a house that costs $276,000 or less. The median home price in Los Angeles has previously been pegged at $450,880. The median price on the Westside is now north of $1 million.
You get the picture.
The good news is that "flipping activity" is "down 1.2 percentage points since last year," a Trulia spokesman said.
Trulia looked at home sales data from late last year and compared it with the same time in 2014 to determine that 6.6 percent of L.A. home sales during that time involved flips.
The report found that the nation's biggest flipping city was the one arguably hardest hit by the Great Recession's foreclosure debacle — Las Vegas, where 10.4 percent of sales involved flipped property.
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Flipping is on the decrease in expensive markets like L.A., the site said, possibly because prices are so high that there are smaller margins for profits.
"Several of the top places with the largest decrease in flipping activity fall into this group, including Los Angeles, San Diego and Denver," the report said.
Ralph McLaughlin, Trulia's chief economist, explained how flipping can make life difficult for the average homestead hopeful.
"Flipping usually entails removing a home from a particular price point in the market and moving it to a higher price point through improvement," he said. "That movement creates competition for home buyers who may be looking to build sweat equity on their own."
Happy house hunting.
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