Fix-and-flip real estate investors are pulling back
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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.
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4 min read
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real estate
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August 21, 2025
01:00 PM
CNBC
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Marioguti | E+ | Getty ImagesA version of this article first appeared in the CNBC perty Play with Diana Olick. perty Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. to receive future editions, straight to your inbox.Higher interest rates and a fast-shrinking labor market are taking their toll on the fix-and-flip housing market
Investors are starting to pull back, as costs rise and the time it takes to sell their renovated s lengthens
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 Re 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 s," wrote Alex Thomas of John Burns Re 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 s increased as the supply of both new and existing s 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.Get perty Play directly to your inboxCNBC's perty Play with Diana Olick covers new and evolving opportunities for the real estate investor, dered weekly to your inbox. here to get access today."I think what our customers are really experiencing, it really comes down to housing velocity and turnover timelines," said Arvind Mohan, CEO of Kiavi. "They are definitely in the velocity , and so if it takes them an extra month to complete a transaction, that's capital that's tied up in that perty that can't necessarily be freed up for the next investment."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."From an ROI perspective, we're not seeing much change there, right? People are still getting that kind of 30% to 31%," said Mohan. "We're definitely seeing the more fessional 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 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. "Flippers in these regions face increasing resale supply, significant competition from builders, and rising costs (particularly insurance)," wrote Thomas in the report.Flippers are also facing the potential of declining prices, depending on where they're working
While prices are still slightly higher nationally than they were a year ago, the gains are shrinking fast, and some are solidly negative, especially those that overheated in the first years of the pandemic
Prices in June were just 1.7% higher than June 2024, according to Cotality, which noted that is well below the rate of inflation
Prices were up just 0.1% month to month, which is the slowest monthly gain since 2008.As a result, Mohan said lenders Kiavi are being more careful. "I'll say definitely, over the last 12 months, we have gotten tighter in our credit box and a little bit more choosier on what types of customers we want to work with in this environment
Things could remain relatively volatile,'' he said.
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