The once-hot fix-and-flip housing market is cooling as higher interest rates, rising costs, and a shrinking labor pool slow sales and strain returns, CNBC writes.
A new index from John Burns Research and Consulting and lender Kiavi shows investor sentiment fell in the second quarter, with sales lagging and competition for deals softening. Just 30% of flippers reported “good” sales compared with 38% a year earlier, as longer days-on-market tied up capital and delayed reinvestment.
Labor shortages—driven in part by immigration enforcement—combined with record labor and material costs are squeezing projects, though ROI margins have held steady near 30%. Professional investors are pulling back, opting to pursue fewer deals to preserve flexibility as home prices lose momentum. June prices were up just 1.7% year over year and nearly flat month to month, the weakest pace since 2008. Regions like Florida, northern California and the Southwest are seeing the sharpest headwinds, with elevated insurance costs and stiff competition from homebuilders further weighing on activity.
