Why Some Flippers are Losing Now…

In 2022, mortgage rates hit 7%, which put a major strain on housing affordability and further priced buyers out of the market.  All the while inflation continued to drive up labor costs, sending costs for home renovations and new builds up and up.  This is a perfect recipe for disaster for home flippers.

Just like anything in life, timing is everything.  Flippers who bought right before the mortgage rates spiked are likely dealing with the reality that they’ll have a tougher time selling than in 2021 and early 2022 when sellers were seeing bidding wars amongst eager buyers.  All of this amounts to the fact that it will be increasingly difficult for home flippers to turn a profit.

Many believe this will just thin the herd of flippers who have entered the market in recent years as home prices increased and HGTV flipping shows gained massive popularity. Another factor is the internet and all the “get rich quick” hucksters selling their systems for flipping. I have clients who flip and it is not for the faint of heart. 

Perhaps the flippers who are more seasoned and have longer-running connections will still make it out of this fairly unscathed.  But for the less experienced, it will be very difficult and thus likely force many people to leave the space altogether.

It remains to be seen if the fix-and-flip market will continue to lose steam as overall home sales/bidding wars have declined, and the cost of financing increased over the past year. If you’re thinking about getting into flipping, best to chat with me first to get a lay of the land. Like I said, it’s not for the timid at this point.

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