Fix and flip real estate investors are pulling back amid high interest rates and a fast-shrinking labor market are taking their toll on the fix-and-flip housing market, Diana Orlick, senior real estate correspondent, writes in her CNBC Property Play blog.
Not only are costs rising, but the also the time it takes to sell a fix and flip home is taking longer and longer and finding workers due to immigration raids.
Roughly one third of flippers pointed to reduced labor availability due to immigration enforcement and fear-driven absences from jobsites. Labor and material costs for flips hit a record high, but costs as a percentage of sales price were flat.
The Fix and Flip Market
The fix-and-flip market contracted slightly in the second quarter of this year from the first quarter and even more sharply from the second quarter of last year, according to an index from John Burns Research and Consulting and Kiavi, a lender focused on the real estate investor.
“Sentiment remains muted, as economic uncertainty, elevated mortgage rates and rising resale inventory weigh on demand for flipped homes,” wrote Alex Thomas of John Burns Research and Consulting, the primary author of the report.
The index surveys roughly 400 flippers and measures current sales, expected sales and flipper competition for deals. All of those sub-indices fell last quarter. Days-on-market for flipped homes increased as the supply of both new and existing homes for sale rose.
Just 30% of flippers reported “good” sales in the second quarter of this year compared to the seasonal norm, down from 38% in the same quarter of 2024.
“We’re definitely seeing the more professional cohorts take a step back, be more conservative, be more choosy, right?,” Mohan said. “If they were going to buy four out of six opportunities a year ago now, they may be buying like two or three out of six just to make sure that they are prepared. As the market resets, they can reset their purchase price and keep the ROI metrics constant.”
Regionally, flippers in Florida, Northern California and the Southwest rated sales more poorly than flippers elsewhere.
