In last week’s article, we discussed whether or not the economy was on the verge of a recession. This week, we’re diving deep into the world of flipping. With the market dynamics constantly shifting, is now really the best time to flip a property? We will be referencing this article from Business Insider.
The onset of the COVID-19 pandemic set almost every industry on fire as they had to pivot and adjust to the new, virtual ways of the world. The real estate industry was no exception as mortgage rates not only enticed families to buy their dream homes, they also enticed house-flipping investors to seek new investments and cash in on potential flips.
But as the mortgage rates continue to rise, could this recent home-buying frenzy for flippers be in jeopardy?
In the first quarter of 2022, U.S. home investors were responsible for 9.6% of all homes sold, representing the highest level since 2000, according to ATTOM Data Solutions’ June home flipping report.
Although home sales by investors skyrocketed to a 22-year-high, their profit margins plummeted to a 13-year-low.
The good news for these flippers, however, is that the demand for homes remains strong. But the bad news is that buyers have become more selective with the properties they’re interested in due to the rising mortgage rates slowing down appreciation rates.
While record-low mortgage rates have persuaded millions of Americans to purchase homes over the last two years, pandemic-level rates are near an end and buyer demand is wavering.
With home appreciation slowing and buyers becoming more selective, house flippers could certainly see a decline in profits over the next couple of years.
