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.
Many housing experts and economists say it may simply signal a healthy recovery — a quick bounce back from prices that had dropped sharply. Others see it as a sign that fast-rising markets may again be getting overheated. In Southern California, the median price has seen year-over-year increases of more than 20% in every month so far this year, according to DataQuick, hitting a record 28% in June.
National home sales fell in June thanks to rising mortgage rates and inventory shortages, after reaching a six-year high in May, but stayed even in the Northeast.
The Pending Home Sales Index, which is based on home contract signings, fell by 0.4 percent to 110.9 in June, the National Association of Realtors said. Still, the index is nearly 11 percent higher than a year before.
The report added: “The PHSI in the Northeast was unchanged at 87.2 in June but is 12.2 percent higher than a year ago.”
In June, Massachusetts recorded its the best month for home sales since June 2010, according to the Warren Group.
The national decline comes after the index hit a six-year high in May, and seems to have been brought by rising mortgage rates and fewer homes for sale, the NAR said.
“Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June,” NAR chief economist Lawrence Yun said.
The average 30-year mortgage rate was 4.31 percent last week, and reached a two-year high of 4.51 percent in late June. The rates jumped after Federal Reserve chairman Ben Bernanke said the central bank could slow its bond-buying program later this year.
Also adding to the slowdown is a lack of homes on the market.
“The persistent lack of inventory also is contributing to lower contract signings,” Yun said.
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Home prices in major U.S. metropolitan areas saw continued growth in the month of May, according to areleased by Standard & Poor’s on Tuesday.
The report said the S&P/Case-Shiller 20-City Composite HomeIndex jumped by 2.4 percent on a non-seasonally adjusted basis in May compared to a revised 2.6 percent increase in April.
Economists had been expecting prices to increase by 2.0 percent compared to the 2.5 percent growth originally reported for the previous month.
On a seasonally adjusted basis, the 20-City Composite Home Price Index rose by 1.0 percent in May following a 1.7 percent increase in April.
Compared to the same month a year ago, the 20-City Composite Home Price Index was up by 12.2 percent in May compared to expectations for 12.3 percent growth.
The annual rate of growth shown by the 20-City Composite Home Price Index for May reflected the strongest since March of 2006.
“Home prices continue to strengthen,” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices.