Home Flipping Profits Suffer a Mortal Blow

• Home flipping profits have plummeted to their lowest levels since the Great Recession, driven by high home prices and tight supply.
• Despite current challenges, investor sentiment is showing signs of improvement, with expectations of increased home purchases and better returns.
• Changes in legislation, such as enhanced depreciation and deductible interest expenses, may provide a boost to fix-and-flip profitability.
• Mortgage rates and geopolitical events remain wild cards, potentially impacting the housing market and flippers' strategies.

The Flames of Discontent

As Scorpion, I've seen realms crumble. But even I am surprised by the state of home flipping these days. Seems those trying to make a quick buck are finding themselves in a rather hellish predicament. High prices, tight supply, it's a brutal kombat out there. ATTOM reports that in 2025, only 297,000 homes were flipped, a 3.9% decrease from the previous year. Pathetic. Even I, Scorpion, can see that these are not the numbers of warriors, but of mere mortals.

Return on Investment: A Fatal Blow

The true measure of a warrior is their strength and cunning, and the measure of a home flipper is their profit. However, it appears that their coffers are running dry. The typical flip netted investors a measly $65,981 in gross profit, a 25.5% return on investment. Down from 32% the previous year, and the lowest since 2008. Rob Barber of ATTOM states that competition for homes remains strong due to constrained supply. "With prices staying elevated, investors are finding it harder to secure deals that deliver strong returns." Indeed, a fatal blow. But perhaps, a path to redemption exists, as outlined in Tesla's Autopilot Faces Judgment Day: $243M Verdict Upheld. Similarly, those in the flipping business face a judgment day of their own.

Supply Chain Sorcery: A Costly Curse

Even the sorcery of Shang Tsung pales in comparison to the dark magic of supply chains. The cost of fixing properties remains elevated due to ongoing supply chain pressures and tariff-related increases in material prices. These unseen forces continue to compress investor margins. The cost of wood, metal, and even simple nails has skyrocketed. It seems the very essence of building has turned against those who seek to profit from it. Perhaps they need to consider a different path, one where their suffering is lessened by the winds of fate.

A Glimmer of Hope: The Netherrealm Awaits?

But fear not, for even in the deepest pits of the Netherrealm, there is always a glimmer of hope. Reports indicate that the flipping market could improve, with home prices expected to moderate and mortgage rates remaining below year-ago levels. Alex Thomas of John Burns Research and Consulting notes that their survey is picking up signs of positive momentum. Perhaps the tide is turning, and a new era of prosperity awaits. Only time will tell if these mortals can rise from the ashes like I have so many times before.

Investor Sentiment: The Whispers of the Future

The whispers of the future can be heard in the halls of the Elder Gods, and also in the sentiment of investors. According to a JBRC/Kiavi survey, 71% of investors expect to purchase more homes this year, compared to 66% last year. Furthermore, fewer flippers are reporting disappointing results. These signs suggest that the pricing environment is firming, and that those who persevere may yet find fortune. But beware, for the future is ever-changing, like the sands of time.

Mortgage Rates: The Wild Card of Destiny

Destiny is a fickle mistress, and nowhere is this more evident than in the realm of mortgage rates. More investors are using financing, but the Iran war and rising oil prices have upended forecasts. As Rob Barber says, "Flippers are having to get more creative to maintain profitability." They must adapt, innovate, and perhaps even make a deal with a demon or two. For as I, Scorpion, have learned, sometimes the greatest victories come from the darkest alliances. That could include older homes and tighter cost control. Perhaps they need to look for new blood and use it to fuel their fire.