The once lucrative fix-and-flip housing market is facing significant headwinds in late 2025, as persistently high mortgage rates dampen buyer demand and force investors to slash prices on renovated properties, according to new data from Realtor.com.
While renovated homes still attract more online attention than their unrenovated counterparts, the premium they command has shrunk significantly compared to 2021. As borrowing costs remain elevated, buyers are increasingly reluctant — or unable — to finance the higher price tags of flipped homes, leading to an 8.3% average discount on final sales prices this year.
The competitive edge that flippers previously enjoyed has blunted considerably. In 2021, flipped homes garnered 25% more page views per listing than other older homes. By October 2025, that advantage had slipped to 6.5%.
While these properties still spend about 10 fewer days on the market than non-renovated listings, the data suggests that the appetite for turnkey properties is waning as the cost of financing that convenience rises.
In the report, Joel Berner, senior economist at Realtor.com, noted that in a high-rate environment, buyers are effectively financing the value of improvements at a higher interest rate, making pre-renovation fixer-uppers comparatively more attractive for those willing to put in “sweat equity.”
The ‘flip factor’ favors affordability
Investment returns are currently shifting toward more affordable markets where lower entry prices allow for greater profit margins. Realtor.com introduced a “Flip Factor” metric, which measures how far up the market a renovation moves a home’s price.
The national average Flip Factor is 36.4%. However, specific Rust Belt and Southern metros are outperforming the national average significantly. Pittsburgh leads the nation with a Flip Factor of 58.2%, followed by Cleveland at 46% and Buffalo, N.Y., at 45.5%.
In these markets, investors can purchase homes for less than half the area’s median price and list them competitively, sometimes even exceeding the local median.
“When costs of renovation are more consistent across geographies than the value of real estate, a relatively fixed investment amount results in a higher return on investment in a location with a lower point of entry,” Berner said in a statement provided to Scotsman Guide. “It’s also the case that affordable markets are drawing more demand and allowing for stronger sales than in markets with higher entry points.”
Conversely, in expensive Western markets like Seattle, Denver and Los Angeles, flipping activity is tighter. While homes in these areas often list above the median price post-renovation, high purchase costs limit the Flip Factor, with cities like San Diego seeing a factor of just 30.3%.
Pricing missteps and discounts
A critical factor in the 2025 data is the tendency for sellers to misjudge market tolerance. Unlike in 2021, when flipped homes sold at a negligible 0.9% discount to their listing price, 2025 sellers are facing a much steeper reality.
Homes flipped and sold between July and September saw an average discount of 8.3% from their maximum listing price.
This pressure on sales prices reinforces reports that fix-and-flip investors are still bleeding profitability, with returns falling to levels not seen since 2008. Industry analysis indicates that mounting holding costs and a “triple squeeze” of high home prices, input costs and tough resale conditions are eating away margins, forcing many investors to pivot toward rental strategies rather than quick resales.
While these structural costs are real, Berner conveyed to Scotsman Guide that he believes psychology plays a major role in the discounting trend.
“I see it as a misreading of the demand problem,” he stated. “We see an elevated rate of price reductions by sellers across the board this year, which we attribute to unrealistic seller expectations. This is an especially easy trap for flippers to fall into when the underlying value of the home prior to renovations may not be what they expected.”
