Are house flippers feeling the pinch of higher mortgage rates and a cooling market?
Are house flippers feeling the pinch of higher mortgage rates and a cooling market?
The Fed raised interest rates again yesterday, which could send mortgage rates up again. The 30-year-fixed-rate hit 6% last week. The housing market is in transition as a result, with fewer buyers in the market, existing home sales down, and home prices moderating.
Also, we could be at a transition-point for home-flippers as well.nIn the “fix-and-flip” market, real estate investors — mostly small contracting companies — buy homes in need of repair, spiff ‘em up, and resell at a profit.
The last few years have been good, with housing demand and prices soaring. But that’s changing, said Rick Sharga at real-estate analytics firm ATTOM Data Solutions. Home-flipping fell in the second quarter — from about 1-in-10, to 1-in-12 home-sales.
“So we’re seeing weakening demand because of weak affordability, prices slow down, and in some markets actually decline a little bit,” he said.
Rising mortgage rates aren’t likely to hurt home-flippers because they typically buy with cash, said Lawrence Yun at the National Association of Realtors.
“People who have cash — they are still in the market and with less buyer competition, they see better opportunity,” he said.
Another bright spot for home-flippers: more distressed properties are coming on the market, now that pandemic-era foreclosure bans have expired.
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