California Flipping Activity at Highest Level Since 2005

Real estate sales have been weakening in California, but ""ForeclosureRadar"":http://www.foreclosureradar.com/ found flipping activity in the state reached its highest level since September 2005.

[IMAGE]

In March 2013, sales for distressed and non-distressed transactions decreased 12.9 percent from a year ago, while foreclosure sales plunged 50.7 percent during the same time period, according to a property report from the analytics firm.

On the other hand, flipping activity, which ForeclosureRadar defined as reselling a property within six months, nearly tripled over a one year period ending in March after accounting for 5.2 percent of total sales.

[COLUMN_BREAK]

The analytics firm explained flipping has been on the rise over the past 12 months as a result of the increase in potential to make a profit as home prices further appreciate.

In 2011, flipping fell flat at a range of 1.4 percent to 1.6 percent of total sales. Then, in 2012, flipping activity doubled and represented 3.3 percent of sales by December 2012.

ForeclosureRadar's report also included an analysis of the impact of rising prices in its large population of underwater borrowers.

According to the firm, 1.8 million California homeowners are underwater out of the 7.3 million homeowners with a mortgage in the state. Of borrowers in negative equity, 1.1 million are deeply underwater, or owe more than 25 percent of their home's value. Adding to this are 225,000 homeowners who are in near negative equity, meaning they have 5 percent or less equity in their home.

On the upside, if home prices were to rise by 10 percent, ForeclosureRadar estimates 415,000 homeowners, or 23 percent of underwater homeowners, will be free from negative equity.

If home prices rise 20 percent, 715,000 homeowners, or 40 percent, will be lifted out of negative equity.

The most recent home price ""report"":http://dsnews.comarticles/corelogic-reports-double-digit-price-growth-in-february-2013-04-03?goback=.gde_133476_member_229244403 from ""CoreLogic"":http://www.corelogic.com/ showed prices in the state rose 15.3 percent year-over-year in February.