Flipping Out

The more I stick my nose into the real estate industry, the more I wonder how people can operate within it completely oblivious economic indicators. And I'm not talking about real estate agents here, their job is to ignore economic indicators, or even better - don't understand them to begin with. You can't be accused of lying if you don't even know what you're talking about

I'm talking about the people who've seen real estate as a honey pot, no matter the time, stuck their nose in and now resemble Winnie the Pooh - unable to get out until they slim down their price.

Here's some good times ahead for a flipper in Launceston.

Purchased back in March (of this year) for $175,000, this 3x2 has been touched up throughout. It came back onto the market 20 days ago for $329,000. Four days ago, the flipper, showing the impatience of a horny teenager with the new copy of Playboy stashed underneath his mattress (I just missed the boat on internet p@rn), dropped the asking price to $300,000.

Some magic renovation dust still can't justify a $125k increase in this market. Forgetting the fact this house backs onto an industrial estate (sharing a back fence with an engineering firm must be crazy fun), Launceston listings have jumped 11% in six weeks. To make matters worse, there are some mid-five figure discounts beginning to appear in the better suburbs - just quietly - this ain't one of the better suburbs.

Adding insult to injury, some of those houses sitting in more desirable suburbs are now hitting the low $300's. So what are you going to buy? The character home on the edge of the industrial estate, with sweeping views of cyclone fences and colourbond sheds or a home built within the last twenty years, offering glimpses of the river?

Yeah, I'd choose the one next to the weekend pit-bull enclosure too.

While we're on dumb, let's get down to Burnie and the beginnings of more flipping hell.

Purchased back in February (this year) for $274,000, ten months later and this 3x1 is back on the market at, wait for it... $365,000. Those are delusions of grandeur because you don't even want to know what isn't selling around that same price point. Well you might want to know, but whoever is trying to flip this thing certainly hasn't even looked and for their mental health it would be best if they didn't - for the same price I could shark a 4x2 with a bigger yard, sea views and more garage space.

While they were on their quest to renovation riches, the predictable happened - listings blew up and sales went pop. Since October, Burnie listings are up 20%. Year on year, Burnie sales are off 40%. There's no way this can end well.

It's no secret - this is Christmas time. What is a secret this time of year and it usually stays hidden, are how bad peoples' finances are. The indebted grit their teeth and attempt to put on their best Christmas for their kids and to keep up appearances for their family. After all, who wants to rock up to the family Christmas as Scrooge, or even let it out that they're on the edge of the abyss? People batten down the hatches, play cool and hope the Powerball numbers will be theirs next week.

The carnage really comes in mid January, when the debt hangover strikes. The bills start rolling in and the phones of the financial counsellors don't stop ringing. Coincidently, I've heard the real estate industry predicting this will be the time buyers return. Combine record listings, with sales continually falling and now the Christmas debt hangover approaching, does anyone think buyers will outnumber the sellers any time soon?

Even Winnie the Pooh wouldn't step into that avalanche for looking for honey.


Note: The people floating into this blog come through all manner of channels; the interesting thing lately are the google search terms referring them here. 'Bubble' is becoming more prevalent, my favourite today? "past housing bubbles time to recover." Seems like someone is weighing up their options and if they should ride it out, or not. At least people are now beginning to ask questions.