South Bay Homes and Real Estate

Real Estate Crash Repercussions

Torrance homeowners definitely feel the repercussions of the real estate crash and Torrance investors are feeling the pain too.

The pinnacle of the Torrance housing market came in 2005, which attracted many investors in 2006. Inspired by the profits some had made, many investors tried to buy large amounts of property and quickly sell it to make quick money. This strategy worked for a while, but soon many people with no experience of the housing market had tried to utilize it.

In current times, the once hot market has cooled. Torrance real estate speculators and investors are having trouble selling what they own, not even concerning themselves with making profits. Supply is greatly outpacing demand. The market for house flipping has almost completely halted.

Another consequence of this crash is that investors are losing money. A key component of house flipping is that the investor finds another buyer so quickly that they are required to make minimal payments on the mortgage. This was fairly simple during the peek of the market.

In Torrance and elsewhere, investors would routinely purchase a home, slightly upgrade in a short period of time, put it on the market, and sell before any mortgage payments needed to be made. Even if they held on for a while longer and had to make a few payments, the profit they made would still be huge. Today, that is not the case.

Torrance investors are realizing that to maximize their situation they have to live in the homes they have bought or rent them out. Investors, who had previously rented, as a way to minimize expenses, have found themselves living in properties they had bought with the goal of selling for a large profit. In certain scenarios, the investors must accept rent rates that are much below market value, in order to cover basic expenses.

South Bay Real Estate Speculators not immune

Problems are even greater for South Bay real estate speculators. The key change in philosophy between an investor and speculator is the process that occurs between the buying and selling of a property. Investors buy a home, renovate in a manor that increases its worth, and resell it. Speculators do basically the same thing, but they make no improvements to the house; they resell as is. During the boom, the strategy worked time and time again, however, in today’s market this simply does not work. All hoping to make any money in the housing market have found that upgrades must be made to the home for any chance of a profitable resell.

Read also: How to Flip a House

Because of the incredible number of Torrance houses available for purchase as a result of investors and speculators, certain locations are trying to completely end the strategy. Some areas have placed minimum time periods that a buyer must hold onto a property before they can resell.

Because the process of home flipping dictates that the property is sold within a half year of purchase, these regulations are effective at ending the practice. Locations that realized this would be a problem and enacted laws early have not had to deal with the struggles that have plagued many areas. In regards to real estate, a small amount of foresight can go a long way.

Though the fallen market has discouraged new investors and caused some to exit the real estate market, it is sure that they will return when the market balances out, possibly by 2010.

Contact me immediately at 310-809-0203 if are in a financial position to take advantage the current Torrance housing downturn by purchasing homes now while the prices are the lowest they have been in years! If you are a Torrance homeowner and you suspect you are in over your head. Call me immediately at 310-809-0203 and I will help you develop and exit plan that will cost you absolutely NO money whatsoever.