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On the heels of announcements from the state real estate trade group that home prices seem to be leveling off right at what’s typically the peak of the season comes the latest numbers from default-tracking organization PropertyRadar, launched as ForeclosureRadar during the housing meltdown of the late 2000s, which find that a higher share of equity sales as opposed to “distressed’ sales continues to drive the market.

Distress sales, including foreclosures, short sales, and court-ordered sales, made up 26.4 percent of California’s total in July, still a historically high percentage but down drastically from about 50 percent a year ago and from 2008-2011, where the majority of all real estate transactions were a result of buyer default.

While rising prices have allowed many buyers to reverse their “underwater” position, 26 percent of the state’s 6.8 million homeowners, or about 1.8 million, still owe banks more than their homes are worth. Another 500,000, PropertyRadar says, have less than 10 percent equity in their homes, making it questionable whether they could sell and walk away even if they chose to do so.

The rising market has created ample opportunity for the return of “flipping,” or the purchase and resale of a home in six months or less for a profit. The volume of flip transactions was at its highest level last month since September 2005, another period of double-digit annual price appreciation.

“Rising prices and rising interest rates are a one-two combo punch that I’m surprised hasn’t resulted in more damage to the real estate market,” says PropertyRadar founder Sean O’Toole, echoing the sentiments of many in the real estate industry. O’Toole goes on to say that the combination of these two factors, which are pricing out many would-be home buyers “has left the market in a wounded and vulnerable position.”

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