California real estate speculation decreasing

By Ari Barak, Bay City News Service

January 17, 2007

Speculation in California's real estate market decreased in 2006, according to an indicator of the quick resale of homes, a consumer real estate information Web site reported this week.

Only 3.2 percent of all homes resold in the state last year were owned for six months or less, the lowest amount since 2.4 percent in 2003, according to the Web site www.HomeSmartReports.com.

The decline in speculative buying and reselling, or "flipping,'' of homes comes as home values have leveled off, reducing the opportunities for profit, HomeSmartReports president Mike Ela said.

"Speculative buying and selling of homes contributes to market volatility and risk, all part of that 'bubble' theory people were talking about,'' Ela said.

In the Bay Area, the percentage of "flip'' sales in 2006 was even lower, at 2.7 percent over all nine counties. Napa County represented the lowest rate of quick resales in the state at 1.9 percent.

According to the Web site, 24.9 percent of "flip'' sales statewide in 2006 resulted in a loss for the seller, after factoring in commissions and costs.

Copyright © 2006 by Bay City News, Inc. -- Republication, Rebroadcast or any other Reuse without the express written consent of Bay City News, Inc. is prohibited.

####