What Does The Future Hold For The Fix-and-flip Market In 2026?

Over the course of 2025, the fix-and-flip housing market was characterized by tighter profit margins and higher expenses — including acquisition, material and labor costs. All of that tied together with tariff uncertainty and properties that continued to linger on the market.

Despite this, investors persisted in their fix-and-flip pursuits, according to industry experts.

Justin Land, president and CEO of Merchants Mortgage & Trust Corp., is focusing on the positives despite broader economic uncertainties.

“We’re hearing quite a bit of optimism with the outlook for 2026. Borrowers feel they can acquire properties over the next few months and develop them in the first half of next year,” Land said.

He noted that entrepreneurial real estate investors continue to expand in the market, taking advantage of opportunities in both declining and appreciating areas. He expects to see “opportunities of stabilization” due to stable interest rates and “predictable” taxes and tariffs.

“For the fix-and-flip market specifically, we see it as a year of stabilization and growth,” Land said. “These entrepreneurs have an opportunity in markets that might be declining to buy properties that are at a very reasonable price, and in markets that are appreciating, they have the opportunity to sell their fix-and-flip properties at margins that are acceptable to them.”

According to the most recent available data from ATTOM, flips accounted for 7.4% of all home sales in the second quarter of 2025. While that was roughly in line with the share in Q2 2024, profit margins declined significantly to 25.1%, the lowest figure since 2008.

The median purchase price for an investor rose to a record figure of $259,700, but the median resale price of $325,000 was flat compared to a year earlier. Gross profits for these projects dropped 13.6% year over year to $65,300 as the typical investor held their property for 165 days — more than five months — before successfully flipping it.

The advantage of experience

While Land is optimistic that the fix-and-flip environment is welcoming to new investors, Erica LaCentra, chief marketing officer at RCN Capital, thinks 2026 will be the year of the old-timer.

“I would say for newbies coming into the fix-and-flip space, unless they have a really good handle on the market or they are looking very closely at areas of the country where there are still strong opportunities, I would caution first-time investors in terms of how they’re looking at deals,” LaCentra said.

Land, however, thinks that all aspiring flippers can get a piece of the pie.

“I think there’s always an opportunity for new investors and new LOs to enter the space. But I do think it’s important for them to focus on gaining a local expertise or a product expertise, so that they kind of become an expert in one particular part of the industry rather than trying to do everything in every state at one time,” he said.

LaCentra said that while investors working with RCN have been resilient, profit margins for flips were hitting possibly the lowest levels that the company has seen in a “significant” amount of time.

As a result, rising material costs, labor shortages and slower home-price appreciation led many fix-and-flip investors to diversify their strategies and incorporate long-term rental property investments to hedge their risk.

But this isn’t news to RCN.

“We at RCN do our own kind of survey and take a look at the sentiment of both fix-and-flip investors and rental investors in the space on a quarterly basis,” LaCentra said.

“One of the things that we saw that was pretty interesting was that a lot of fix-and-flip investors within the past year have changed their strategy for real estate investment. And by that, I mean they have switched entirely to have more of a rental investment model. That being said, I don’t think they’re necessarily discouraged. I think there’s still quite a bit of optimism.”

John Beacham, the founder CEO and founder of Toorak Capital Partners is also optimistic.

“I think 2026 will be a year of higher activity for flippers. There’s kind of this, I would say, inventory of transactions that would have happened if rates had been at a different level. It’s like a pent-up wave of activity that is going to get unleashed at some point,” he said.

But that’s not to say Beacham hasn’t heard concerns from flippers.

“I think there’s a lot of concern around the tariffs and also the availability of labor. ICE officials are going over to HomeDepot lots and arresting people … so we’ve heard anecdotally that in some cases, it’s harder to find labor and that’s resulted in higher labor costs.”

Beacham thinks that the impact of higher costs for materials isn’t as big of a deal.

“There was a lot of concern back in April about the tariffs and it hasn’t manifested itself in such a big way,” he said. “We’re not seeing lenders or deals that were in process before and after Liberation Day get significant amounts of stress or real problems for our borrowers.”

Opportunity awaits in key markets

Each expert identified key areas that could see continued growth throughout 2026. Land expects continued strength in the Colorado, Arizona and California markets.

“We’ve seen [those markets] be strong for us throughout 2025,” he said. “We’ve also seen some of the coastal markets, or the COVID-19 markets that experienced a lot of growth … softened or stabilized.”

Land expects investors and flippers will find success by using “tech-enabled strategies” in their approaches.

“Over the past few years, you’ve seen things like AI and machine learning being involved in underwriting and some of the credit and lending functions,” he said. “I think you’re starting to see that more on the small investor side, too, where these tools are becoming more and more available, and are being used more to help identify opportunities to help make the construction or the rehabilitation of a project more efficient.”

LaCentra said that several hot markets for Connecticut-based RCN lie within Georgia — specifically Atlanta, Macon and Columbus.

“We’re still seeing some activity in Memphis, Tennessee, but I would say Georgia still continues to be probably one of the hottest states from a fix-and-flip perspective,” she said. “We definitely anticipate that continuing at least through the first, probably second quarter, of 2026 as well.”

Beacham expects to continue seeing success in places like the Northeast.

“The Northeast held up really, really well. The Midwest market also held up pretty well. … I don’t think you’re going to see radical change over the next year. I think volumes will increase over the course of next year,” he said.

“We’re seeing delinquencies decrease. And it’s a really positive sign that people are able to sell properties, can get their deals done, are able to complete their construction, and that bodes well for next year.”