The Southern California flipper epidemic: A market in the middle of crosswinds. What a $2+ million flip in Arcadia will get you.

The flippers are out roaming the Southern California freeways in luxurious SUV fashion with Bluetooth fully activated.  Funny how quickly things can change.  Last week I was browsing the late night talk shows and who shows up?  One of those reality show flippers from SoCal!  I believe the moratorium on flipping homes is now out the window and now we are back on the housing mania bandwagon.  Acceleration in flipping activity is a clear sign of a housing market that is overheating.  For flipping to occur on a large scale, you need an overall rising market.  Flipping completely depends on selling homes for higher and higher prices.  That is the entire point of investing time and energy into a project that you will turn around and sell quickly.  This is why it is fascinating to see the kind of prices some flippers are now demanding in the market.  Yet the market is now seeing some signs of cooling after a two year run.  Today we’ll look at a flip in Arcadia.

The $2 million Arcadia flip
This is an interesting flip in Arcadia:


521 VAQUERO Rd, Arcadia, CA 91007
This is a very nice home in the city of Arcadia.  Arcadia is a premium market although nothing like Santa Monica or La Jolla.  So to command celebrity like prices is somewhat odd for a 4 bedroom house.  It is a big 4 bedroom listed at 3,699 square feet.
I mapped this place and it is actually very close to the 210:
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For $2.2 million you might expect to be further away from a major freeway (at least it isn’t the 405 I suppose).  Another thing that caught my attention is the activity on this property.  There have been reports that the average length of time a person will stay in a property is 7 years.  So when I hear people whine that “they can’t buy to set roots in California” I have to grimace because these are the people that a few years down the road “need” a move up home since 2,000 square feet is no longer enough for a 10 pound toddler.  In other words, people have this nostalgic view that they will sit in their property for 30 years smoking a pipe when the facts fly directly in the face of this (plus, those that are crying that they missed this run-up are essentially saying they are speculators).  You don’t make any money until you sell therefore you are contradicting the emotional pleas that you cannot afford a place to settle down.  So back to this flip, let us look at the action:

Interesting action here.  The place has sold 5 times in the last 14 years and has been foreclosed on once (so not counting the foreclosure, we are looking at an average holding period of 3 years).  The big winners here are the person that bought in 1999 and sold in 2004 and the person that bought in 2013 and flipped it in June for nearly double the price (from $991,000 to $1,820,000).  I imagine this is where most of the upgrades also came into play.
But look at the current action.  Someone that just closed in June is now trying to sell this place for $2.2 million!  The place was only “owned” for one month before trying to offload it to the next buyer for $468,000 more.  What could have been done in one month to justify this jump?  These examples drive at the core of the current mania in California and other high priced metro areas.
In this zip code of Arcadia, the median household income is around $70,000 (however, about 50 percent are renters in this zip code).  The median price of homes sold in this zip code is $1.2 million (up 38 percent from last year).  Inventory in Arcadia has also doubled since the low reached in Q1 of 2013.  Rising prices and rising inventory signal some sort of crosswinds (that is, something will have to give and momentum is slowing down).
Welcome to home flipping California style.  This will be an interesting flip to track at a tipping point in the market.
Do you have any other examples of extreme flips in SoCal you would like to share in the comments?