Open House by Jim Woodard

"House flipping" and other real estate investor activities are reviving in popularity. Bargain priced homes and historically low mortgage rates are bringing investors out of the woods and into the active marketplace again.

In case you've forgotten, house flipping is the practice of purchasing a home with the intent of quickly reselling it for a profit.

The growing activity by investors is one reason for the recent resurgence in home sales in many markets, according to a study and report by John Burns Consulting, a real estate research and consulting firm. Investor sales now constitute nearly 26 percent of total sales — up from the peak of 24 percent during the super-active 2005 to 2006 period.

"Our conversations with investors reveal that many are looking to rent the properties they buy, as opposed to flipping them as was common in the up-cycle, although there are flippers this time around as well," the Burns report stated. "With the cost of homeownership falling to or even below rental parity in many markets, investors are increasingly able to make these investments cash-flow-positive by making a large down payment."

Investors are generally required to make large down payments, so there is minimal likelihood that their purchases will cause future distress. If investors should flood the market to take profits, then housing will have rebounded. Increasing investor activity is a positive scenario, the report said.

Investor activity, of course, varies by market. It should be noted that second home sales are counted as investor sales. Therefore, those large second home markets are ranked high in terms of investor sales percentages. Markets that have experienced the greatest number of distressed home sales have seen the greatest rise in investor activity compared to a year ago, according to the Burns study.

"Actual investor activity is probably even higher than our conservative modeling shows because some owners don't change the property tax address. We are confident that the recent trend of growing investor buying is accurate," the report concluded.

Q: When will foreign investors become active in the U.S.

housing market again?

A: Major foreign investors see a recovery in the U.S. housing market by the end of the second quarter of next year, according to a survey by the Association of Foreign Investors in Real Estate — as reported in the current issue of The Residential Specialist magazine.

Nearly a third of the survey respondents now feel increasingly optimistic about their investments. While three-fourths of them had not made any investments so far this year, more than two-thirds plan to invest in U.S. real estate before the end of the year.

Q: Are some people willing to rent a haunted residence?

A: In a recent survey commissioned by Rent.com, it was revealed that 11 percent of renters believe they have lived in a home inhabited by ghosts. Others would be willing to do so if they could save money.

More than half (51 percent) of renters would share their home with a ghost in exchange for free rent, and over one-quarter (27 percent) would do so if they could save half the normal rent. About 30 percent of respondents said they would put up with a ghost if they received free utilities, while 23 percent would do so if they were given a free flat-screen TV with cable service.

Overall, 31 percent of renters said they would not accept a haunted unit under any arrangement — nothing would conquer their phasmophobia (fear of ghosts).

Q: Is there a special program that helps the unemployed pay their mortgage?

A: Proposed by the Federal Deposit Insurance Corp., a new program would be specifically designed to help unemployed and underemployed homeowners who are facing possible foreclosure of their homes. The FDIC is encouraging banks to temporarily reduce the mortgage payments substantially for qualified homeowners for a six-month period.

However, only a small number of homeowners would be able to benefit from such a program because it would only apply to those institutions that bought failed banks and participate in loss-share agreements with FDIC. These institutions are primarily regional and community banks. But there is a possibility that such a program could be expanded to include other institutions.

The growing number of unemployed homeowners has long worried legislators. Other foreclosure-prevention programs don't offer much help for the unemployed because they don't have income at this point.

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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