Ron Trujillo | Aug 21, 2019 | 0
Minority homeowners gain ground but still ‘fell further behind’
By Ron Trujilloemail@example.com
Largely minority neighborhoods enjoyed some head-turning equity gains during the past six years, including in the Bay Area and Southern California.
But white-dominated neighborhoods reported larger actual dollar gains nationwide and in California between 2012 and 2018, according to a new Redfin report. It’s the latest evidence that homeowners in mostly minority communities continue to fall behind equity — and wealth — gains of those in white and even in many mixed-race neighborhoods.
Only Riverside County, one of the most diverse regions in the state, bucked the national trend with a 271% increase in equity for minority neighborhoods during the six-year period. Mostly white neighborhoods had a 134% gain in Riverside County, while mixed-race neighborhoods had a 222% increase.
Riverside County minority homeowners also had the largest dollar gain — the only of the 16 markets nationwide where minorities outpaced the equity increases in white and mixed-race neighborhoods. Minorities had a $187,000 increase in Riverside County, while whites and mixed-race neighborhoods enjoyed $156,000 and $180,000 gains in equity, respectively.
“Home prices over the last six years rose most steeply in minority communities, and unlike in past booms when Americans just borrowed more and more money, these price gains led to real increases in wealth for homeowners of color,” says Redfin Chief Executive Officer Glenn Kelman. “But even though homeowners in mostly minority communities had the largest percentage gains in home equity, it was the folks living in mostly white neighborhoods who had the largest dollar gains, just because they had so much more home equity at the beginning of the recovery.
“This just goes to show that, even as a strong market broadly benefits homeowners, it’s still very hard for people starting with less money ever to catch up. On an absolute-dollar basis, homeowners in minority communities became wealthier, but still fell further behind.”
Feature photo of downtown Riverside by Jon Bilous/Shutterstock. Photo of San Diego bungalow by Meunierd/Shutterstock
How California cities fared for minorities, whites and mixed-race neighborhoods by equity gains in dollars and percentages from 2012 to 2018:
Minorities: $314,000, 234%
Whites: $490,000, 187%
Mixed-race: $383,000, 197%
Minorities: $187,000, 271%
Whites: $156,000, 134%
Mixed-race: $180,000, 222%
Minorities: $261,000, 251%
Whites: $362,000, 194%
Mixed-race: $278,000, 187%
Minorities: $515,000, 318%
Whites: $590,000, 222%
Mixed-race: $546,000, 274%
CA has 3 of 4 most-expensive home markets in U.S.
Now, for the obvious – California is a very expensive housing market, especially for those in the Bay and the Los Angeles region. But do you know how pricey compared to the rest of U.S., including some other expensive markets such as Manhattan and Miami’s South Beach?
The Golden State has 77 of the nation’s 100 most-expensive housing markets, according to PropertyShark. Atherton in San Mateo County is the priciest city in the nation at $4.95 million — $850,000 more than second-place New York City.
Thirteen of the 20 most-expensive markets are in California, with Beverly Hills, Santa Monica, Palo Alto and Los Altos finishing in fifth- through eighth-place, respectively. How California cities ranked and the median home price:
- Atherton (1): $4.95 million
- Beverly Hills (5): $3.85 million
- Santa Monica (6): $3.51 million
- Palo Alto (7): $3.3 million
- Los Altos, ZIP code 94022 (8): $3.2 million
- Ross (11): $2.99 million
- Newport Coast (12): $2.92 million
- Portola Valley (13): $2.89 million
- Los Altos, ZIP code 94024 (14): $2.88 million
- Newport Beach (16): $2.87 million
- Santa Barbara (18): $2.76 million
- Los Angeles (19): $2.73 million
- Diablo: (20) $2.62 million
The complete list is available here.
Photo of Newport Beach pier by Ric Sorgel/Shutterstock
Home flipping starts to flounder
The home flipping boom may be about to go bust, as fast-rising home prices are slowing the number of buy-remodel-flip opportunities — and the return on investment.
Home flipping returns dipped to 44.3% during the second quarter nationwide, compared to 47.8% in the first quarter and 50% a year ago. The current return is the lowest since third-quarter 2014, according to the closely watched ATTOM Data Solutions’ Home Flipping Report.
It’s still a rather hefty return on investment, but remember the cash needed and the time to refurbish and sell the home, which can take several months or more. Plus, the general risk of higher interest rates and a souring market while turning an eyesore into a head-turning property.
Fewer depressed homes on the market — think foreclosures and pre-foreclosures — are turning grins to groans for flippers, according to the report. Only 32% of flipped homes were depressed homes, compared to 39% a year ago and the peak of 68% in first-quarter 2010.
“Fewer distressed sales are limiting the ability of home flippers to find deep discounts even while rising interest rates are shrinking the pool of potential buyers for flipped homes,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “These two forces are squeezing average home flipping returns, pushing investors to leverage financing or migrate to markets with more distressed discounts available to achieve more favorable returns.”
Several California markets easily exceeded the national average return on investment — including Barstow (93%) Marysville (81%) Oakland (69%) and Bakersfield (62%) — but many others are showing evidence of slowing and even struggling. For example, flippers in Palm Desert earned an average return of 6.5% or only $15,250.
Click below to view a national chart on markets, including dozens in California. If you are looking for a specific market, it may be easier to type in the city or county in the search field in the upper left rather than trying to zoom in on the map.