House Flipping Is Flopping

After the housing crash, flipping homes became a popular way to make money in real estate. In today's market, flipping is no longer penciling out.

Out of three of the past six months, home flip volume has decreased by double-digit percentages year-over-year, according to Attom Data Solutions. In August, flip volume dropped 18 percent annually. Flipping homes is most popular in California, which had a 22 percent annual drop. CNBC reports that headwinds facing flippers include rising interest rates and home price appreciation which, while slower, is still diminishing affordability and project timetables. The gross return on flipping homes hit a seven-year low in August, and the amount of time it takes to sell a flipped home is taking the longest since June 2006, at 186 days.

"A competitive housing market with just trace amounts of distressed deals available is a challenge for home flippers because the traditional flipping model depends on a steep discount when the home flip is purchased," said Daren Blomquist, senior vice president at Attom. "This year the disposition side of the home flip equation has also become more challenging, as rising mortgage rates have cooled off demand from first-time buyers and other financed buyers who flippers often sell their product to."

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