Prospective homebuyers aren’t the only ones dealing with elevated housing costs and a dearth of new inventory. According to Realtor.com, home flippers aren’t faring well either. The share of homes purchased by investors, rehabbed, and resold within 12 months fell for the second straight quarter in Q3, causing investor profits to fall to their lowest level in 13 years.
Though purchase prices are cutting into investor profits, the real kryptonite of the fix-and-flip market is a lack of demand from buyers priced out by fast-rising mortgage rates, a rising trend that forces sellers to cut prices or leave homes sitting on the market for longer.
“The ideal environment for fix-and-flip investors is a market with high demand, low inventory, rapidly rising prices, and affordable financing,” says Rick Sharga, ATTOM’s vice president of market intelligence.
Flippers also benefit when there are lots of foreclosures, short sales, and other cheap properties they can remodel and resell.
“Today’s market has weakening demand, prices plateauing or falling, higher finance costs, and no distressed inventory at all,” adds Sharga.
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