Key facts
- The Fix and Flip Market Index declined to 59 in the second quarter, down from 63 in the prior quarter.
- A 40- to 50-basis-point increase in mortgage rates during the second quarter has impacted fix-and-flip demand.
- 59% of surveyed home flippers reported an increase in days on market compared to the first quarter.
- One in five flippers reported selling their homes below estimated after-repair values, an increase from the previous quarter.
- Large flippers, defined as those who bought or sold eight or more homes in the prior 18 months, reported stronger market conditions than smaller operators.
- 59% of flippers reported securing new loans in Q2, the highest share in two years.
The fix-and-flip housing market is showing signs of strain, with a significant increase in mortgage rates during the second quarter contributing to a decline in demand and a rise in the time homes spend on the market. The latest Fix and Flip Market Index from John Burns Research & Consulting and Kiavi fell to 59 in the second quarter, marking its second consecutive quarterly decrease.
Approximately 59% of surveyed home flippers reported that their properties took longer to sell compared to the first quarter. This trend was particularly pronounced in the Northwest and Texas, where 83% and 75% of flippers, respectively, noted increased days on market. Furthermore, one in five flippers reported selling their homes for less than the estimated after-repair value (ARV), an increase from 17% in the previous quarter. Nationally, 73% of flipped homes sold for under $500,000 over the past year.
Regional variations in market conditions were evident, with the Southeast and Texas experiencing the most weakness. Conversely, Northern California and the Midwest were the only regions where more flippers sold above ARVs than below. Northern California recorded the highest average flipped home price at $1.2 million. Average renovation costs nationwide decreased to $69,000, now representing 15% of flipped home sales prices, down from 17% a year ago.
For the first time, the survey segmented data by flipper size, revealing that larger operators who bought or sold eight or more homes in the prior 18 months consistently reported stronger market conditions. These larger flippers may benefit from more favorable financing, established contractor relationships, and a more sophisticated deal pipeline. About half of flipped homes were sold to entry-level buyers, with investors purchasing only 15% in the second quarter.
Financing trends indicate that 59% of flippers secured new loans in the second quarter, the highest share in two years, with average effective interest rates on fix-and-flip loans continuing to compress. Real estate agents are advised to prepare clients for longer marketing periods, as modeling on past sales data may understate current time-to-sell. The report also noted an increasing trend of flippers exploring rental exits due to the extended market times.