How tariffs will change the fix-and-flip market

The fix-and-flip market (buying homes, renovating them, and selling for profit) is one of the hardest sectors to track in residential real estate. That’s why we partner with Kiavi to survey approximately 500 home flippers each quarter to understand this important segment of investor housing demand.

Our latest Fix and Flip Survey shows a notable decline in flipper optimism, mainly due to concerns about tariffs and how broader economic uncertainty is affecting housing demand. We conducted this survey from April 1–28, with nearly all responses coming after the Trump administration’s major tariff announcement on April 2.

Flippers expect sales and pricing conditions to worsen over the next 6 months

Nationwide, flippers now expect only +1.8% price growth for flipped homes over the next 6 months, down considerably from +2.9% one year ago. Flippers in every region except the Northeast predict lower price appreciation over the next 6 months compared to the first quarter of 2024. Flippers expect prices to fall in 3 regions (Florida, Southern California, and Northern California).

For sales volume, only 31% of flippers expect Good sales compared to normal seasonal patterns over the next 6 months. This is the most pessimistic flippers have been about sales since late 2022, when mortgage rates first hit 7% in over 2 decades.

Economic uncertainty is a major factor affecting expected sales. Several flippers noted that buyers hesitate to make major purchases in today’s economic environment.

“People are so unsure about the economy, the presidency, and the future that they are not as quick to buy homes.” – Charlotte, NC, flipper

“Buyer hesitation is driving down home prices.” – Ventura, CA, flipper

Regional housing supply conditions also influence flippers’ near-term expectations.

Flippers are least optimistic in Florida and Texas, where just 16% and 18% of flippers, respectively, expect Good sales relative to seasonal norms in the next 6 months. These regions have significant new home inventory and resale homes for sale, which pushes prices down.
Flippers are much more confident in regions with limited housing supply: 57% in the Northeast and 40% in the Midwest expect Good sales in the next 6 months.

Flippers will renovate less if material prices rise suddenly

We asked flippers this quarter what their primary strategy would be if building costs suddenly rose by +10%. We chose +10% as a simple benchmark—the actual impact of tariffs will likely vary considerably depending on the type of renovation needed.

About one-third of flippers (32%) said they would focus on properties needing less extensive or less expensive renovation—essentially targeting “light rehab” opportunities. Another 7% said they would switch to cheaper alternative materials, while 6% would simply flip fewer homes.

“This uncertainty around tariffs and the overall economy forces me to do my homework on opportunities and understand my holding costs. I am more reluctant to take on projects with heavy renovations right now.” – Atlanta, GA, flipper

Combined, 45% of flippers would prioritize spending less on renovations if material prices suddenly increased. Since flipped homes sales represent 7%–8% of all existing home sales nationally, swings in flipped renovation trends can significantly impact building product manufacturers. For more detailed product-specific insight, contact our Building Products team.

Regional differences in flippers’ strategies

How flippers would handle sudden material cost increases varies significantly by region, based on local supply and demand conditions:

Northeast and Midwest: Sellers have the most pricing power in these low-supply regions, so flippers are much more likely to simply pass cost increases on to buyers.

Florida: With higher housing inventory, flippers lack pricing power and would more likely absorb costs by reducing their profit margins.

California: Labor costs often comprise a larger portion of renovation expenses in expensive markets. Flippers are more likely to reduce their margins in California, where a 10% increase in material costs has relatively less impact on flippers’ overall margins.

Texas, Southeast, and Southwest: In areas with newer housing stock, flippers say they would deal with higher material costs by focusing on properties needing less extensive renovations. Higher inventory of homes for sale (especially in Texas) may also allow flippers to be more selective about which properties they purchase to renovate.

For ongoing coverage of the fix-and-flip space and analysis of metro-level market conditions, contact our Research team.