By Amina Niasse
NEW YORK (Reuters) — While the increase in interest rates engineered by the Federal Reserve over the last two years put a damper on the overall U.S. housing market, it took a sledge hammer to home flippers from small contractors to reality TV stars.
Just ask Tarek El Moussa, star of HGTV’s «The Flipping El Moussas» and former co-host of the real estate and renovation focused channel's mainstay, «Flip or Flop.»
“How do I account for [interest rates]? I got my ass kicked last year. I lost a lot of money. And that's just the reality of the business,” said El Moussa.
Indeed, house flipping — or investing in, and often renovating, a single-family home with the intent to sell for a profit — has fallen from heights seen during the COVID-19 pandemic. The number of Americans acting as investors in the housing market dived 38.85% between 2021 and 2023’s fourth quarter, according to property data provider ATTOM Data Solutions. Through the fourth quarter of 2023, the share of homes purchased by investors fell 11% on a year-over-year basis, a report from real estate and mortgage firm Redfin (NASDAQ:RDFN) said.
Even so, housing investors spent $32.3 billion on homes in the U.S. in 2023, compared with $33.6 billion a year earlier, and flippers bought 26% of the lowest-priced homes during 2023's fourth quarter, Redfin said.
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HGTV's El Moussa bought 91 homes in 2021 — garnering him a $600,000 average monthly mortgage payment. Then mortgage rates surged, home sales in southern California plunged, and he found himself with inventory he could not offload.
Home flipping does best in a frenetic “buyer’s market,” with prices rising amid increased transactions, said Chen Zhao, Redfin’s senior economist. After
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