Are house flippers feeling the pinch of higher mortgage rates and a cooling market?

Mitchell Hartman Sep 22, 2022
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Despite rising mortgage rates and the general status of the market, home flippers appear to be on solid ground. Getty Images

Are house flippers feeling the pinch of higher mortgage rates and a cooling market?

Mitchell Hartman Sep 22, 2022
Heard on:
Despite rising mortgage rates and the general status of the market, home flippers appear to be on solid ground. Getty Images
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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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