A recent report from real estate data analytics firm Attom revealed that 114,706 single-family houses and condos were flipped during the first quarter of 2022, representing 9.6% of all transactions during that period. Despite a growing flip rate, the return on investment for Q1 deals dropped to 25.8 percent, a 13-year low likely caused by a lack of inventory, The New York Times reports.
A smaller profit margin is likely the consequence of inflated mortgage rates slowing demand from budget-conscious buyers. Investors have responded to strong housing demand throughout much of the COVID-19 pandemic, but that could change as an affordability crisis widens and buyers pull back.
The shrinking profit margin for “fix-and-flip” investors can be traced to a lack of inventory, said Rick Sharga, the executive vice president of market intelligence at Attom, caused in part by rising mortgage rates. “People are staying in their current house because they don’t want to trade a 3 percent mortgage for a 6 percent mortgage,” he said.
Advertisement
Related Stories
Market Data + Trends
Vacation and Investment Home Market Insights
A recent report finds beach homes to be the most sought-after vacation-home type and that the investment potential of a second home is an important factor in the purchasing decision
Affordability
How Much Income Do First-Time Buyers Need to Afford the Average Home?
The median-priced home is unaffordable in 44 of the 50 largest U.S. metro areas
Affordability
What Is the Relationship Between Urban vs. Suburban Development and Affordability?
A new paper from Harvard's Joint Center looks at whether expanding the supply of suburban housing could, in turn, help make dense urban areas more affordable
