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Rising Interest Rates Pose Challenges for Both Home Flippers and Contractors

HGTV adapts its programming to reflect changing market (Via Devon Castle/Shutterstock)

The Federal Reserve has raised interest rates several times over the past two years, and this has had a big impact on the U.S. housing market. One group hit hard by these changes is home flippers, including small contractors and TV personalities like Tarek El Moussa from HGTV’s “The Flipping El Moussas” and “Flip or Flop.” He has spoken openly about losing a lot of money because of the higher interest rates.

There has been a noticeable decrease in house flipping activity, with fewer investors buying homes compared to previous years. Even so, investors still spent billions on homes in 2023, though less than before. Flippers are now mostly focusing on buying cheaper homes, especially during the last quarter of 2023.

The fast-paced housing market that was favorable for house flipping has slowed down significantly due to the higher interest rates. This has created a buyer’s market where there are fewer homes available and less demand.

Rising interest rates severely impact home flipping ventures (Via Bob Conway/Shutterstock)

Although mortgage rates have come down slightly from their peak of 6.87%, they are still much higher than they were before the pandemic.

Because of these changes, investors like El Moussa are changing their strategies. Instead of traditional house flipping, they are now doing wholesale deals that have smaller profits but are less risky.

For contractors and construction companies, the slowdown in house flipping has meant less business and lower profits. Some have had to lay off workers or find other ways to make money, like offering loans secured by property or exploring new types of work.

Despite these challenges, HGTV shows are still going strong. They are adapting by talking more about how the housing market works and exploring new topics like second homes and homes for multiple generations. This helps them keep up with what viewers want, even as the real estate market changes.

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