Over the past two and a half years, home flipping was a great money-making business. Investors bought homes and sometimes upgraded them to sell them at higher prices. Since home prices nationwide rose almost every month, people who undertook the process made obscene amounts of money. A new study shows that this period is over and home flipping has become a financial danger.
ATTOM, the real estate research company, recently published its third-quarter home flipping report. The data for Home Flipping Declines Again Across U.S. During Third Quarter of 2022 as Investor Profits Hit 13-Year Low covers 94,022 single-family homes and condominiums, which was 7.5% of all such transactions during the period.
Thirteen years ago was a terrible time for homeowners, because the Great Recession brutalized the housing market. As interest rates now rise and homes become less affordable, there is a concern prices will plunge again. Because there are so few variable-rate mortgages, almost no one believes the problem will be as great as in 2007 to 2010.
Rick Sharga, Executive Vice President of Market Intelligence at ATTOM, described the challenge, “While flipping activity in the third quarter was among the highest on record, gross profits and profit margins declined significantly, reflecting the overall pricing weakness in today’s housing market.”
Get Our Free Investment Newsletter
The gross profit for flipped homes dropped to $62,000 from $76,000 in the second quarter. In a few of the covered markets, investors either lost money or made nearly nothing. In Jackson, Mississippi, the flippers had a 0.4% loss. In Honolulu, the loss was 0.3%. Flippers made only $0.1% in Boise, one of the fastest-growing markets over the past three years.
ALSO READ: Each State’s Grandest Historic Mansion
The fate of people who flip homes probably will worsen in the next few quarters. Based on interest rate increases by the Federal Reserve, mortgage rates also are expected to rise.
Sponsored: Tips for Investing
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
Source: Read Full Article
Lionsgate CFO Says Strike Is Squeezing Management And Production Subsidiary 3 Arts, With Roughly $30M Quarterly Revenue Hit; Expresses Hope For “Mid-Fall” End To Walkouts
20 of Modern Warfare’s Most Lethal Weapons
The City Where the Most People Make Money Flipping Homes
Fernando Valenzuela Number Retired By Los Angeles Dodgers, As ‘Fernandomania’ Lives Again
More Women Buy Luxury Cars In Post-pandemic Shift