THE MARKET: Home value increases surpassed median salaries in 25 metro areas last year, report says



The term “household income” was given new meaning in 2021 as a banner year for home appreciation found houses themselves earning more than the median worker in major metros across the country. 2021 was a year of haves and have-nots, and the chasm between the two widening throughout. Those who owned a home saw their household wealth increase dramatically. But many renters witnessed that dream either soar out of reach or had to drastically adjust their expectations and plans.

Home value appreciation in 2021 was higher than median wages in 25 of 38 major metropolitan areas, with appreciation reaching higher than $100,000 in 11 of them. Though San Jose has the highest median salary at $93,000, it also led all major metros in annual home value appreciation — with the typical home growing a whopping $229,277 over 2021, nearly what oral surgeons make. 

Expensive coastal markets in California and Hawaii saw home value growth wallop incomes by the largest amounts. San Jose led but San Francisco closely followed, with homes earning $129,914 more than the median salary. Boise, Salt Lake City, Seattle and Phoenix rounded out the top 10. 

Metropolitan areas with the lowest home price appreciation relative to median salaries were Detroit, St. Louis and Baltimore, though even the smallest home value growth among these metros, in St. Louis, was still higher than $27,000. 

While homeowners watched their assets multiply in 2021, the chasm separating many renters from homeownership widened, as home prices skyrocketed and rising rents eroded their ability to save for a down payment.

Rents rose 16% across the U.S. in 2021 and upward of 25% in popular Sun Belt locales like Miami, Phoenix and Las Vegas. Locking in a one-year lease on a typical U.S. rental cost $3,072 more at the end of the year than the start of the year. It was $7,104 more in Miami, $4,644 more in Phoenix and $4,380 more in Las Vegas — major hits to a household budget, as that money can’t be saved toward a down payment. 

At the same time, down payments — often the highest hurdle to homeownership for first-time buyers — rose by more than $10,000 in 2021 for a typical 30-year fixed mortgage. Sticking with our metros used in the rent comparison, typical down payments rose nearly $14,500 in Miami, more than $20,600 in Phoenix and $16,700 in Las Vegas. 



6 reasons you should sell your home right now



While it’s a notoriously tough time to buy a home, the incentives to sell the one you’re in could be too good to pass up.

Most (89%) of current homeowners who want to list their homes right now say something is preventing them from doing so, according to NerdWallet’s recently released 2022 Home Buyer Report. The most commonly cited roadblocks: concerns about finding a new house and paying too much for a new house.

It’s true that finding a home and especially finding one that fits all of your needs is a challenge right now. Competition over the few homes on the market is driving prices up. It’s taking multiple offers and sometimes a hot tip on a house not yet listed to close a deal. However, current owners have an edge. By making the most of the market on the seller side, they’ll enter the buyer side with more money to fuel their buying power.

Buyers want your home

Inventory is so low, there are likely multiple buyers looking for a home like yours right now.

In 2019, there were 1.3 million homes on the market in any given month, on average. By 2021, the number of active listings had fallen by 57%, to 540,000 on average, according to NerdWallet’s analysis of data. There was already a home shortage before the pandemic, but COVID-19 took a bad situation and made it worse. Now, homes are selling within days, not weeks or months, and commanding multiple competitive offers. That demand shows few signs of letting up.

Nearly 26 million Americans say they plan to buy a home this year, according to the Home Buyer Report. That number is unrealistic — typically 5 million to 6 million homes are sold each year — but it does indicate the flood of buyers isn’t likely to subside.

Selling now may mean a bigger profit

High demand in the face of low supply has made for record high prices. This means you’re more likely to pay off your current mortgage and walk away with a profit than you would’ve been just a few years ago.

Homes are also being listed at higher prices, and selling at or above asking price. In fact, buyers typically paid 100% of the list price in 2021, and 29% paid more than list price. While the sales price represents your ultimate financial benefit, getting offers over what you expect brings added excitement to the transaction.

Typical sale prices grew from $270,000 on average in 2019, before the pandemic, to $344,000 in 2021, according to data from the National Association of Realtors. And in some places, they’ve grown even more.

About three-quarters (74%) of sellers did not have to reduce their asking price at all in 2021, compared with 60% in 2019 and 39% a decade ago in 2011, according to NerdWallet’s analysis. The analysis covered 10 years of data from the NAR’s annual Profile of Home Buyers and Sellers report.

Closing day may come more quickly, with fewer sacrifices

Buying or selling a home is never a stress-free transaction, but selling now is far easier than in recent years. Not only do you stand to have multiple competitive offers, but you’re also more likely to cruise through closing with fewer frustrations.

Homes are moving quickly

In 2021, homes were typically on the market for a single week, compared with 3 weeks in 2019, and 11 weeks in 2012 and 2013, according to our analysis of NAR data.

Sellers are having to give up less

It’s relatively common for sellers to do some wheeling and dealing during the closing process — offering a warranty or money for repairs to the buyer, for instance. But those perks have become less common.

Almost three-fourths of sellers didn’t offer any incentives to attract buyers in 2021, compared to about 60% 10 years ago, according to our analysis of NAR data. The share of those offering a home warranty fell from 23% to 13% during that same period, and the share of sellers assisting with closing costs fell from 20% to 9%.

You’re more likely to walk away pleased

Closing on a home sale can leave you with lessons learned, if not regrets. But in this market, that’s less likely. Seven in 10 (70%) sellers walked away from the home selling process “very satisfied” in 2021. A decade ago, just 54% could say the same, according to NAR data.

Also read: ‘We live 5 minutes from our in-laws who have a larger home’: Is it a good idea to swap houses? Will I end up with a surprise tax bill?

So, should you list?

If you’ve been thinking of selling, but are on the fence because you don’t want to join the competitive pool of buyers, consider these questions:

Are you willing and able to move somewhere more affordable?

If yes, the profits from your sale will go further in a less competitive market. Not everyone wants to move to a rural setting (like I did), but your offers will be more attractive to sellers in areas where demand isn’t as hot. You’ll be able to make a larger down payment and possibly reduce your new mortgage’s term, both of which stand to save you considerably over the long term.

Are you ‘over’ homeownership?

If yes, it’s perfectly fine to go back to renting, or move in with someone else who has a deed or a mortgage. Owning a home isn’t for everyone, and it doesn’t have to be forever. Further, owning a home can be expensive — 1 in 5 homeowners say affording home repairs and maintenance is among their top financial stressors for the next two years, according to the NerdWallet 2022 Home Buyer Report.

Are you highly motivated?

If yes, you’re more likely to have what it takes to be a buyer in today’s market. Finding a house you like will take time, and you might have to make offers on several homes before you go under contract. Being tenacious and knowing what challenges await you can better equip you for the potential battle ahead.

Written by Elizabeth Renter for

The housing Market Had a Wild 2021. Here’s What Awaits in 2022


FROM CNN .COM: The US housing market has had a white hot 2021. Home sales are on track to reach the highest level in 15 years, with an estimated 6 million homes sold in 2021.

But whether you benefited from this surge depended a lot on if you were selling a home or buying one.
Homeowners saw average home prices skyrocket nearly 20% through the third quarter compared to a year ago, according to the Federal Housing Finance Agency. It was the largest annual home price increase in the history of the agency’s House Price Index. And, in some hot markets, the price increase was double that.

Homes also sold at a record pace, with sellers often fielding multiple competing bids and all-cash offers. Even homes that were disgusting or burned out sold quickly, and at amounts that were well over the asking price.

For buyers, it was a different story. While mortgage rates kicked off the year at record lows, it was difficult to even find a home to buy. Inventory of available homes reached an all-time low early in the year and competition was extremely stiff.
Many prospective buyers left the market dejected and without a home to call their own. As a result, demand for rentals surged and rents went up across the country.

“It was an insane year,” said Matt Holm, an agent with Compass in Austin. Last January, he put a smaller five-year-old home on the market at $425,000, higher than comparable sale prices, and was flooded with offers. “I stopped counting at 35 offers,” he said. The home sold for $545,000, a 30% increase over the list price.
Another buyer, who bought a lakefront luxury home for $6 million in 2020, was offered $9 million a few months later and $11 million two months after that by buyers desperate for a lakefront property, Holm said.
“My sellers said, that’s a lot of money,” Holm said. “They wanted to sell and get something as good or better. But they realized they shouldn’t sell because to get something a little bit nicer than what they had was going to cost $18 to $20 million. That is a remarkable jump for a calendar year.”
Without a doubt, the housing market was on a wild ride in 2021. Here’s what to expect as we head into the new year.

No more record low mortgage rates

The year began with the lowest interest rates on record, with average rates for a 30-year fixed rate mortgage at 2.65%. But they didn’t last long. By April 1, that had reached a 2021 peak of 3.18%. Rates have fluctuated since, with the 30-year fixed at 3.05% last week, according to Freddie Mac. And we can expect rates to move even higher in the new year.

The Federal Reserve has given several signals that its pandemic monetary policy will come to an end as it works to curb inflation. Ultimately, that will push interest rates higher.
The Fed’s revised policy won’t put a dent in the pockets of people looking to purchase a home within the next few months, but they might want to act soon, said Melissa Cohn, the regional vice president and executive mortgage banker of William Raveis Mortgage.
“Mortgage rates should remain range bound around 3% through the end of the year and hopefully through the first two months of 2022,” said Cohn, who anticipates rates to increase by up to a half a percentage point over the next couple of months.
Similarly, Lawrence Yun, chief economist at the National Association of Realtors, expects the 30-year fixed mortgage rate to increase to 3.7% by the end of next year, but noted this will still be lower than the pre-pandemic rate of around 4%.
“Increased mortgage rates, coupled with inflation eating away at savings, will take a toll on buyers,” said Allison Salzer, a Compass agent in San Francisco. “It will affect the lower-priced and median-priced home purchasers more than the luxury buyers.”

Inventory will remain tight

Even though more properties became available as the spring home buying season heated up this year, there were also more people looking to buy, creating fierce competition and pushing prices skyward.
There were so few homes, people were taking extreme measures like offering to buy the seller’s next home for them, giving thousands of dollars to competing buyers to walk away and paying as much as $1 million over the home’s asking price. One home in Maryland received 76 all-cash offers.
Inventory was tightest at the lower end of the market. Homes priced under $200,000 have been hard to come by, with the number of available properties falling 19% this year compared to last year, while there was a 40% annual increase for homes above $600,000, according to HouseCanary, a real estate data company.
While the inventory picture is expected to improve in 2022, it isn’t expected to perk up by much. Inventory will remain limited and grow by only 0.3% in 2022, according to a forecast.
“The greatest factor I see affecting the 2022 housing market is the low inventory,” said Paulo Prietto, a Compass agent in Orange County, California. “While inventory remains low, buyers will become more accustomed to the lack of choices and will continue to aggressively compete to purchase homes.”
As long as that happens, prices will continue to go up.

Home prices will keep rising

Home prices rose nearly everywhere in the country in 2021.
While existing home sales reached a median price of $353,900 by November, up 13.9% from a year ago, new construction home prices were even higher. New construction homes hit a median price of $416,900 in November, according to the US Census Bureau, about 19% higher than a year ago, and another new record.
While we won’t see the double-digit gains that were made in the past year, prices are expected to keep rising in 2022 at a slightly more moderate pace.
A group of 20 top economic and housing experts brought together by the National Association of Realtors projected that median home prices will increase by 5.7% next year. The NAR survey participants said they expect the housing market and broader economy to normalize next year as the Fed tries to tame inflation.
“Slowing price growth will partly be the consequence of interest rate hikes by the Federal Reserve,” Yun said.

First-time buyers will continue to face challenges

The prevalence of all-cash offers, few available homes and skyrocketing prices pushed many first-time buyers out of the market in 2021.
By the end of November the share of first-time buyers had fallen to 26% from 32% a year before, the lowest level since the National Association of Realtors began tracking in 2008.
“We are creating a divided society,” said Yun. “People don’t feel like they are participating in what they consider to be American life through homeownership. All their work to build up savings can feel less meaningful in the face of rising prices.”
Not only were prices rising faster than people could save for a down payment, many mortgage types favored by new homebuyers, like FHA and VA loans, were often passed over for all-cash deals or conventional loans.

The inventory of homes at the lower end of the price range was so tight that the number of sales priced between $100,000 and $250,000 were down by nearly 20% in November, according to NAR.

And while new construction homes are now starting to come on line, most are priced outside of the typical first-time homebuyer’s budget.
“Builders are focusing more on high-priced houses, with the percent sold for under $300,000 falling to just 14% from 33% a year ago,” said Robert Frick, corporate economist at Navy Federal Credit Union.

But many hopeful homebuyers are saying they will be back in the spring, armed with the knowledge they gained from a frustrated search this past year, according to a recent survey from

“Despite a challenging year, aspiring first-time homebuyers are surprisingly optimistic about 2022,” said George Ratiu,’s manager of economic research. “They’re looking at the new year as a fresh opportunity to make their dreams of owning a home come true.”


SUNDAY REMINDER: LA Marathon & Fall Clock Change


This coming Sunday, Nov 7th marks two events that ask for a bit of preparation and planning for us Angelenos: The LA MARATHON & the Fall Clock Change/ End of Daylight Savings

MARATHON FIRST: - here’s what you need to know, from KTLA’s Digital Staff writers (KATLA.COM):

The 2021 Los Angeles Marathon returns on Nov. 7, debuting a new 26.2-mile course that is expected to draw thousands of runners from around the world. 

The marathon’s new “Stadium to the Stars” course begins at Dodger Stadium, runs through West Hollywood and Beverly Hills before ending on Avenue of the Stars in Century City. ( click on photo to ENLARGE map)


That means that the course will follow its traditional route until Brentwood, where runners double back on San Vicente, Sepulveda and Santa Monica boulevards before finishing at Avenue of the Stars. Organizers say this will allow for a more interactive finish and greater spectator participation.


Road closures

The Marathon course will be closed to vehicular traffic for six hours and a half right after the last runner crosses the start line. The course will then begin reopening to vehicular traffic on a rolling basis.

Road closures will begin at 4 a.m., with some roads closed through the afternoon.

These roads will be closed:

  • Elysian Park Avenue: between Dodger Stadium and Sunset Boulevard (4 a.m. to 9 a.m.)
  • Sunset Boulevard: from Park Avenue to Figueroa Street (4 a.m. to 9:20 a.m.)
  • Cesar Chavez Ave: from Bunker Hill to Alameda Street (4 a.m. to 9:32 a.m.)
  • Broadway: from Cesar Chavez Avenue to Alpine Street (4 a.m. to 9:35 a.m.)
  • Alpine Street: from Hill to Alameda streets (4 a.m. to 9:35 a.m.)
  • Spring Street: from College to 1st streets (4 a.m. to 9:35 a.m.)
  • 1st Street: from hope to San Pedro streets (4 a.m. to 9:50 a.m.)
  • Los Angeles Street: from Temple to 5th streets (4 a.m. to 9:50 a.m.)
  • 4th Street: from Los Angeles to Main streets (4 a.m. to 9:50 a.m.)
  • Main Street: from 5th to Temple streets (4 a.m. to 9:50 a.m.)
  • 3rd Street: from San Pedro to Hill streets (4 a.m. to 9:50 a.m.)
  • Hill Street: from 4th to Temple streets (4 a.m. to 9:50 a.m.)
  • 1st Street: from San Pedro to Hope streets (4 a.m. to 10:05 a.m.)
  • Grand Avenue: from Cesar Chavez Avenue to 2nd street (4 a.m. to 10:05 a.m.)
  • Temple Street: from Alameda Street to Glendale Boulevard (4 a.m. to 10:20 a.m.)
  • Edgeware Road: from Temple to Boston streets (4 a.m. to 10:20 a.m.)
  • Bellevue Avenue: from Sunset to Glendale boulevards (4 a.m. to 10:20 a.m.)
  • Glendale Boulevard: from Temple Street to Sunset Boulevard (4 a.m. to 10:40 a.m.)
  • Sunset Boulevard: from Echo Park Avenue to Virgil Avenue (4 a.m. to 11:10 a.m.)
  • Hollywood Boulevard: from Hillhurst Avenue to La Brea (4 a.m. to 12 p.m.)
  • Orange Avenue: from Hollywood Boulevard to Sunset Boulevard (4 a.m. to 12 p.m.)
  • Sunset Boulevard: from Highland Avenue to Doheny Drive ( 5 a.m. to 12:45 p.m.)
  • San Vicente Boulevard: from Sunset Boulevard to Melrose Avenue (5 a.m. to 1 p.m.)
  • Santa Monica Boulevard: La Cienega Boulevard to Sierra Drive (5 a.m. to 1 p.m.)
  • Doheny Drive: from Nemo Street to Wilshire Boulevard (5 a.m. to 1 p.m.)
  • Burton Way: from Robertson Boulevard to Rexford Drive (5 a.m. to 1 p.m.)
  • S. Santa Monica Boulevard: from Rexford Drive to Moreno Boulevard (5 a.m. to 1 p.m.)
  • Rodeo Drive: from Santa Monica to Wilshire boulevards (5 a.m. to 1 p.m.)
  • Wilshire Boulevard: from Beverly Drive to Santa Monica Boulevard (5 a.m. to 1 p.m.)
  • Santa Monica Boulevard (WB and EB Lanes):  from Wilshire to Sepulveda boulevards (5 a.m. to 5 p.m.)
  • Sepulveda Boulevard: from Santa Monica Boulevard to Wilshire Avenue (5 a.m. to 2:45 p.m.)
  • Wilshire Boulevard (WB and EB Lanes): Sepulveda Boulevard to Barrington Avenue (5 a.m. to 2:20 p.m.)
  • San Vicente Boulevard: from Wilshire Boulevard to Saltair Avenue (5 a.m. to 5 p.m.)

Some ramps along the north and southbound 110 Freeway will also be affected, so will some ramps on the southbound 405 Freeway.


Clocks officially “fall back” at 2 a.m. on the first Sunday in November to 1 a.m.

Daylights Savings Time  concludes at 2 a.m. on Sunday, Nov. 7, 2021, when the clock will “fall back” one hour and in theory we get one extra hour of sleep.


The concept dates back more than a century when English architect William Willett proposed the idea to change the clocks in 1907 in The Waste of Daylight.

The suggestion of using daylight more efficiently can be traced to Benjamin Franklin. While visiting in Paris in 1784, he wrote a letter to the editors of the Journal of Paris calling for a tax on every Parisian whose windows were shuttered after sunrise to “encourage the economy of using sunshine instead of candles,” according to Michael Downing, author of Spring Forward: The Annual Madness of Daylight Saving Time.

Photos by Miguel A. Amutio on Unsplash





Buying a flipped home? Here’s what you’ll have to be aware of

Coming Soon Larchmont2ND RESIZE

Examine permits, check pricing and start with the right kind of inspection to spot shoddy work


The business of house flipping looms large in the American public imagination. Between reality television shows about the practice to infomercials promoting it as a get-rich-quick scheme, nearly everyone is familiar with the concept of buying, renovating and quickly reselling real estate at a profit.

But is house flipping a good deal for those who end up moving in long-term? And if you’re looking to buy one, how do you know if the pretty house with new paint and granite countertops is a great deal or a lemon?

These questions burned through my mind nearly a decade ago, when I bought my first house as a newlywed. An adorable, renovated ranch popped up at a reasonable price and caught my eye. But that price was double what it had sold for just months earlier. It was vacant, and while the renovations looked great I wasn’t sure if they justified a 100 percent increase in the asking price.

In the end, my wife and I pulled the trigger and the choice proved wise. The house served us well while steadily appreciating in value. Best of all, we moved in knowing it wouldn’t need any big-ticket makeovers for years.

“There is nothing wrong with buying a flipped house,” said Chris Egner, a home remodeler based in New Berlin, Wis., and president of the National Association of the Remodeling Industry. “You can buy an old house and hire someone to remodel it, or you can buy one somebody else remodeled and it’s already done and ready to move into. The caution is that, like any other endeavor, there are some people doing work that are not qualified to do it.”

There are strategies new home buyers can use to identify whether the house they’re looking at was flipped and, if so, whether the work was done by quality contractors.

Finding a flip

Once a prospective homeowner identifies a house they like, the first step is figuring out whether it has been flipped. There are several ways of doing this.
The first question is, does anyone live here?

“As a general rule, a flip usually is going to be vacant,” said Bruce Barker, a North Carolina-based home inspector and president of the American Society of Home Inspectors. “A flip is going to have fresh paint, at least on the inside. Probably new carpet, probably granite or quartz countertops and a new sink in the kitchen [but with] old cabinets. That’s almost a dead giveaway.”

Of course, not all vacant houses are flips. A second way to check is to see when the house was last sold, which can be done by checking with your local government or sometimes by looking through real estate websites like Zillow and Redfin. If the house was sold less than six months ago, there’s a good chance it was flipped.

Though Egner works in the home remodeling industry, he too warns consumers to watch out for shoddy work and corner-cutting with flipped houses. Often it’s the work consumers don’t see — the plumbing, the wiring inside the walls — that will cause trouble if a flip was done unprofessionally.

If it looks like renovation work was done on the home before it was put on the market, prospective buyers should always look to see if permits were pulled for the work, which can also be done through your local government.

If a flipped home doesn’t have permits, that may be a sign that the work was done as a do-it-yourself project. More importantly, it likely also means the work wasn’t professionally inspected.

When done well, he embraces the idea of renovating houses as a business.

“A lot of people don’t have time to buy a house, move in and then spend the next six months redoing the kitchen, bathrooms and whatever else,” said Egner. “If you can buy something that’s move-in ready, that’s awesome. People doing them right are doing a great service to society in general. What better way to reuse and recycle than to take an old, rundown house and turn it into a brand-new, functional and usable property?”

House hunting

Are flipped houses a good deal for the buyer? That depends on a lot of factors, according to Duluth, Minn.-based real estate agent Len Sarvela with Real Estate Masters.

“Many flipped houses are wonderfully done, with permits taken out, priced at fair market value and representing a great deal for the buyer,” said Sarvela, an agent with the National Association of Realtors. “But with the market we have now, with a shortage of inventory, buyers know what their money will get them.”

Sarvela advises comparing the sale price to what the house last sold for, which is usually a matter of public record, especially if it was last sold just a few months ago. Does the work done since that day really justify the price hike?

“If the sales price doubles, there better be a pretty good justification based on the materials and amenities that were put into the house,” said Sarvela.

Typically, a buyer can tell what has been renovated in a flipped house. The new countertops, sink, tile floors and other items usually stand out quite a bit given that the house itself is older. From there, a buyer can analyze and decide whether those new amenities justify the price hike.

Often a buyer can find older pictures of the house they’re looking at online from when it was sold before the flip. That was the case with the house I bought in 2013, the listing photos from before the flipper got it were still up on Zillow, so it was very easy to compare and see what they had done. This isn’t always the case, of course.

One of the biggest benefits of buying a renovated home is that it’s often move-in ready and won’t need any significant work done right away. The downside comes when that promise turns out to be false — if the buyer moves in only to find out that the roof needs replacing or the bathroom has no vapor barrier and mold is growing.

“Ask the buyer’s agent if they have experience with homes that have been flipped,” Savela said. “And ask that early in the process.”


Once you’ve decided you’re serious about a house and ready to commit to buying it, one of the most important remaining steps is to get a professional home inspection.

While this process is optional, and can be pricey, inspections can ultimately save the buyer money by finding problems ahead of time and asking the seller to cover the cost of repairs. If enough problems are found, the inspection can even be the impetus for a prospective buyer to walk away.

This is one place where I made the wrong choice. Rather than hiring a certified inspector, I went with a friend’s uncle-in-law who claimed that he built a lot of houses. It saved me $75 and he huffed around the house acting like an expert during his inspection.

Months later, I learned the flippers never reinstalled two of the six heating ducts under the house when they put new tile in the kitchen and bathrooms. They’d blown hot air into our crawlspace all winter! A friend and I went to Home Depot, rented some tools and hooked them back up, but it cost a lot more than $75, not to mention the effort, the headache and three months of higher heating bills.

“I inspected a house last week with new paint on the inside, new carpeting and kitchen countertops, but they hadn’t changed the bathrooms,” said Barker, the home inspector. “The water heater was older, the HVAC was older, the roof covering was at the end of its service life. Those are the kinds of things some flippers will do. They’ll do the cosmetic things to make it look good, but when you start digging into the details, that’s when you start finding things that are problematic.”

And the same level of scrutiny should be applied when finding the person who will inspect the home.

“When looking for an inspector, you definitely want to look for things like years of experience, certifications and a license if they’re in a jurisdiction that licenses inspectors,” Barker said. “Years of experience is about the only objective standard that you can go by. If you’ve done enough inspections you’ve seen most of what you’re going to see.”

Ideally, an inspection will be a simple process that finds only minor issues. Either way, it’s better to know for sure than to find out after the fact.

“Essentially, what you’re buying with a home inspection is peace of mind,” said Barker.

Getting a mortgage

The final step in purchasing a home, flipped or not, is obtaining a mortgage.

However, this process should begin before a home buyer even looks at their first house.

“We want to make sure buyers can get preapproved for a loan,” said Emanuel Santa-Donato, vice president of capital markets at New York-based Better Mortgage. “The first step is to identify what you can afford.”

While the two may not seem connected, a flipped house can become an issue when obtaining a mortgage. For buyers using a government-backed loan through the Federal Housing Administration (FHA) or the Department of Veterans Affairs, houses can’t change hands again less than 90 days from the previous sale.

“If it’s a very quick flip, FHA will not be an option,” said Santa-Donato. “That goes out to 180 days if the sale’s value doubles.”

For conventional loans there’s no set rule, as each lender will have their own criteria for what’s allowed. Santa-Donato said most banks do include a 90-day restriction, though not all.

And if the quality of work on a renovation is subpar, that can also affect a buyer’s ability to secure a mortgage.

“If the kitchen is unfinished you can’t lend on the house,” Santa-Donato said. “If you have exposed wires you can’t lend on the house. It’s a fairly clear health and safety bar that comes from the appraisal process. If there are obvious things missing, a loan can’t be made.”

While a turnaround of less than 90 days might be a warning sign of work that was done quickly and perhaps at a lower quality, in 2021’s hot housing market many buyers are still willing to take a look. Some lenders, including Better Mortgage, will make cash offers on behalf of clients, arrange for them to rent the house and then have them officially take on a mortgage after the new 90-day window closes.

Unfortunately for today’s buyers, that’s a big change from when I bought my flip in the last days of the Great Recession. They’ll have to be much quicker on their feet to land a contract.

“In some housing markets it might be different, but right now I don’t think sellers will be all that patient,” said Santa-Donato. “There’s a lot of demand out there.”

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