Investors gobble up fixer-uppers despite scarce inventory

Eviction moratorium cuts off main source of house flips

National /
Sep.September 08, 2021 07:31 AM
Home flips are at their lowest since 2003 while big money is pouring in from investors looking for fixer-uppers. (iStock)
Home flips are at their lowest since 2003 while big money is pouring in from investors looking for fixer-uppers. (iStock)

Investors are increasingly seeking fixer-uppers to flip, hoping the venture is anything but a flop.

Even though they’re emboldened by yields ranging between 8 and 12 percent, though, they’re having a hard time finding available homes as a hot housing market limits opportunities according to the Wall Street Journal.

Another factor: foreclosure moratoriums that have been in place for much of the pandemic.
Typically a pipeline for those looking for fixer-uppers, that market has been shuttered by the moratoriums. A national ban on evictions was recently lifted.

Now, flips are stuck at a historic low. Property data firm Attom reported that 2.7 percent of first-quarter home sales were flips, defined as a sale within a year of the previous sale. That’s the lowest percentage since at least 2000 and the lowest number of flipped homes and condos in a quarter since 2003.

A study from CoreLogic found the 2006 house flip rate was 11.3 percent, while the rate was as high as 10.6 percent back in the fourth quarter of 2018, meaning the house-flipping market has had a big downturn.

That hasn’t stopped investors looking for a quick buck from pouring money into companies and people who flip fixer-upper homes.

Lender Roc360 received $2 billion from Athene Holding last week to give more loans to flippers. New York Mortgage Trust had $622 million of flip loans by the end of June. Investors are also pooling loans into massive securities.

Two years ago, KKR invested an additional $250 million in Toorak Capital Partners, which had more than $1 billion in house-flipping loans at the time.

[WSJ] — Holden Walter-Warner





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