Fix-and-flippers are bleeding profitability | 12 County Bay Area Real Estate Report



 



Fix-and-flip investors are still bleeding profitability.

Fed chair candidate sees ‘plenty of room’ to cut rates in 2026

PROBATE AND ESTATE SALES

Cupertino Home of the Week 

Willow Glen Home of the Week 

Luxury Home of the Week 

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Happy Monday. We're talking about money, 

Fed Chair Candidates and Rate Cuts
Look, fed chair candidates see plenty of room to cut rates in 2026. It's good. I'd vote for that guy. It makes me happy, makes the whole industry happy, makes the GDP and the stock market and everything happy. I bet you'll see that kind of stuff popping up here pretty quick.

December 10th, this was reported on real estate news. The President's rumor to pick. Served the next Fed chair, voiced support for more rate cuts in 2026, and raised concerns about perceived partisanship in the central bank. Again, it goes down here saying he doesn't believe in the politicizing of the federal money.

Political and Media Commentary

The White House shrugged off a report suggesting Trump may have once committed mortgage fraud.

Yeah. Okay. Whatever. I mean, if there's an accusation, it better be provable before you make that accusation. Otherwise, you're liable. CFPB is our governing body that talks about and manages, and regulates how we do business and how we loan money, et cetera. On Capitol Hill, the road housing Act.

Okay? So the Fed chair can size candidate criticisms, central banks, and banks' politicization. You gotta say that. If you're gonna be on Trump's board, you know, if you're not gonna be a yes man, you are not gonna, anyway. Paul's sitting in his integrity. I have no problem with that. I don't like it.

But I'm a grownup.  He's doing it to ease tensions on the global scale, on the economic scale. It has nothing to do with his political views. I understand that. Still don't like it. You know, we're all adults. We just have to figure it out. I'd rather have 3%, 4% mortgage rates. We're not gonna get everything we want in Life.

House denies Trump committed Mor. Okay. So we can go through all that. 

Real Estate Market Trends

The whole point I wanted to talk about is that Kevin Hassett might be favoring lower rates next year. , cause what we have right now is just slowing the market down. I can tell you that right now, it's preventing. Home sellers going on the market because where they move, really doesn't make sense if I have a two-and-a-half to three-and-a-half percent rate, and I go to a six-and-a-half percent rate, it just doesn't make sense to me to do that anyway. 


Fix and Flip Insights
Fixing and proving that fix-and-flip investors are bleeding profitability. Yeah, so on average, you're looking to make 15, 20% profit on your flip, and most of that comes on the buy side, right?

It's like when you buy a business or an investment, you want to buy low and sell high.  Over the last years, we've seen that profit peak. And now on the average across the nation, they're saying gross profits of 60,000 in the third quarter were down 68%, the prior quarter, and 73 a year ago.

Here's the thing: when you're buying properties, you need to have a good profit margin, or else it doesn't matter. It means somebody's gonna get screwed. If you're an investor or a wholesaler or what have you, and you're being a predator on older people, and you're telling them a million-dollar house is only worth 1.5, shame on you.

Shame on you. That is not a business, that is thievery. If you take an old building and fix it up and put money into it to make it look pretty again. You do it right. That's okay. That's a good business. But here in the Bay Area, it is so expensive to buy houses, even crappy ones, which we see every day or every Thursday, we see what you get for a million dollars in Santa Clara County.
There'ss shortcuts that are happening. I bought a house for my parents last year, and we looked at a bunch of houses; a couple of 'em were flipped, and they looked like crap. This one that we bought was flipped, but everything on it was excellent workmanship. So you gotta know what you're looking at, and if you're going to buy a flip and you're using an agent and they don't know the difference between a crappy flip and a good flip, get another agent.




High-End Property Listings
What is that Cupertino House of the Week? $3.5 million. This price decreased. Somebody saw dollar signs, got greedy. It's 1500 square feet. Where is this? This is right off of Miller and Blaney. Let's take a quick look.

Yeah. It looks like it's in a commercial zone. That's why I wanna look at it. You're right here. Right next to shopping, et cetera. Location, location, location. I wouldn't buy this one for three and a half million dollars. Whoever's selling this is desperate to sell it.

They're tired, they're headstrong. They're stubborn. Look. Is that plastic crap? The vinyl stuff. And I tell you what, I'd rather spend three and a half million dollars on a nice house. Willow Glen, house of the week on Willow Glen Way.


Two bedroom, two bath. Not my listing. $1.7 million on the market. 68 days. Here's the thing, guys. The market's pretty much peaked. Now we can go down. We can go up. We don't know. I don't tell the fortune, I don't, I can't tell the future. I certainly am horrible at buying and selling stocks. So, listening to me about where the market's going, I don't know.

I can have a feeling that the market's gonna turn down, which is okay. I'm completely okay with that because I think it will reinvigorate the market and bring it back, especially if rates come down and don't nudge.  Those who can afford a $35 million house like this one right here. They're never gonna worry about it.

They don't care. These people are so rich that if a recession hit, they probably wouldn't even feel it. I mean, they'd see it, they'd feel it. They'd probably like a mosquito bite, right? So it doesn't really matter.

All of the real and any of these listing agents think that they have hoity-toity, and they're also, you know, everybody, oh, I'm the greatest agent because I have a $35 million house. They just know somebody. That's all it is. Real estate is knowing the right people. I know a lot of the right people. I know a lot of left people.
I know a lot of wrong people, but I don't know, $35 million homeowner people. That's just the way it is. I'm okay with that, but I like talking about it because it's nice. This is $35 million, not my listing. All three lanes, seven bedrooms, five and a half baths on an acre in Los Altos Hills, you get a whopping eight pictures for $35 million.

That's a great deal. That is excellent marketing. Any which way you look at it? $35 million? Where's the video? Don't ask. All right. 

Year-End Market Summary
Everything's kind of coming up to an edge, a plateau, a peak, if you would say. And that means even the velocity of the market is slowing. But we know that it's in the middle of December, the middle of winter, the end of the year, everybody's packing up, going into hibernation, and focusing on holidays.
Being with their kids, being with their family, buying and selling a house is not really the big thing on everybody's mind unless you know it just happens to fall in your lap. We've had seven sales this week, seven sales last week in Blossom Valley, and in Santa Clara County, about 149.
These are closing, though. This happened a month ago, listings, new listings. This w,  week we had 98 new listings in Santa Clara County, and we had 95 go into contract. That's out of  800 or so that are actively for sale. We're close to $19 billion in revenue.

We're close to 8 units sold in Santa Clara County, but I don't think we're gonna beat last year's numbers. Not even in San Jose. Look, here you go. These are just numbers that I picked out from the MLS 2023. We sold 3620 we sold 4,200 this year. We're gonna be lucky if we get to 4,000.

Same thing with Santa Clara County. 7100 8200, and we'll be lucky if we get to 78. We'll see. My point is that ates being as high as they are are preventing a majority of sellers who want to move from selling. When people want to move, and they can't really afford it, they're gonna stay put. As a matter of fact, there's an article out that I read, I think last week, about people staying in place and building up or building out, 'cause if your needs change, use what you got.

And, yeah, I'll do another report, I think, at the end of next week. Talk about the expireds and do a compilation on the ones that expired and canceled, or were withdrawn because they were overpriced. Maybe I'll sample a couple of CMAs for that, but outside of that, we've had a pretty decent year, right?

Inventory is low months of inventory, especially for Santa Clara County is one of the least. San Francisco is the lowest in the counties, right? That's on average, and Boston Valley. You know, we've had that. 

Conclusion and Future Outlook

Hope you had a great weekend.  

Vito Scarnecchia
Real Estate Broker, Veteran, Dad
DRE#: 01407676
408-705-6817
Vitos@abitano.com
FREE DESKTOP APPRAISAL https://www.propertyrate.com/agent/vitoscarnecchia
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