Rising mortgage rates hurt home flippers business

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Rising mortgage rates have a new victim: the house flippers.

Flippers, which turned a quick profit just a few months ago, is caught in a housing market pivot as homebuyers falter. Mortgage interest rates hit 7%according to bloomberg.

“This is a high-risk, high-reward business. And now we’re facing high risk,” Tammy Merrell, a full-time Denver-area flipper, told the outlet. I just pray that I will be

Earlier this year, home flipping was one in 10 transactions, according to Atom, a data provider that tracks properties bought and sold within a 12-month period. That number fell to 8.2% he in the second quarter.

Demand has also cooled. Flip’s profit margin in August he hit 25.9%, down from 30.9% he had a year earlier. But after reaching 45% in March, he plummeted in some areas, such as San Jose, Calif., where the margin was his 6.5%. Silicon Valley has been an outlier in the pandemic housing market, lacking the extreme price increases seen elsewhere.

iBuyers face these issues on a massive scale. For example, 42% of housing open door Goods sold in August were cheaper than what they paid, according to YipitData.

Noah Brosius, president of coin lender Capital Fund I, which operates in Phoenix, Colorado and Texas, said Home Flipping customers are struggling to pay back their loans. His portfolio’s default rate has doubled to 2.5% in the past two months, but is still below pre-pandemic levels.

“Anyone flipping right now needs to look closely at property pricing,” said Brocious. “Bid to sell. Today is not the time to be greedy.”

— Sasha Jones

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