They call me Flipper......
Remember that 60's TV show 'Flipper'? Check out this news story in the Palm Beach Post link . The current market is infiltrated with 'flippers"- people that have purchased in the hopes of selling to the next person at a profit. ( Often called the "next fool theory.)
" In third quarter of 2005 ..."
"24.4 percent of homes and condos sold in Palm Beach County had been bought in the previous two years. During the same period last year the figure was 19.3 percent, and five years ago it was just 9.4 percent."
"24.6 percent of homes and condos sold in Martin County had been bought in the previous two years. During the same period last year the figure was 22.3 percent, and five years ago it was just 10.8 percent."
"28.5 percent of homes and condos sold in St. Lucie County had been bought in the previous two years. During the same period last year the figure was 26.2 percent, and five years ago it was just 12.3 percent."
"In September 2005, about one-in-15 sales were of homes and condos that had been flipped in just six months or less. That rate was one-in-77 in September 2000."
Couple this with a huge run up in inventory.....
"Active home listings for Palm Beach County in the Regional Multiple Listing Service — including single-family homes, condominiums and townhomes — increased a startling 83 percent from August 2004 to September 2005, said veteran Realtor Randy Bianchi, co-owner of Paradise Properties in West Palm Beach. Active listings for three-bedroom, two-bath, single-family homes in Palm Beach County have risen 64 percent in the same period, to 2,364 from 1,441, he said."
As I drive around town, there are more and more "For Sale" signs popping up. Reality is starting to sink in and as I predicted, those wanting to sell are getting somewhat antsy. The rush to the exitway has begun. No one wants to be the last ones out of a sinking ship. Financial markets ( including Real Estate) are often controlled by human emotions, not fundamentals. We witnessed this time and time again, yet the media and the public fail to comprehend this. As this downward pressure accelerates, the rush to the exits will create a frenzy, feeding upon itself.