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Flipping Activity by Investors Declines at Fastest Pace in 15 Years; Investment Returns on Flips Sink to Lowest Level Since 2007; Two-Thirds of Flipped Homes Still Purchased with Cash ATTOM, a leading curator of land, property, and real estate data, released its year-end 2023 U.S. Home Flipping Report, which shows that 308,922 single-family homes and condos in the United States were flipped in 2023. That was down 29.3 percent from 436,807 in 2022 – the largest annual drop since 2008. The report further reveals that as the number of homes flipped by investors declined, so did flips as a portion of all home sales, from 8.6 percent in 2022 to 8.1 percent last year. In yet another sign of down times for the home-flipping industry, profits and profit margins also sank on quick buy-renovate-and-resell projects. Gross profits on typical home flips in 2023 dropped to $66,000 nationwide (the difference between the median sales price and the median amount originally paid by investors). That was down from $70,100 in 2022 and translated into just a 27.5 percent return on investment compared to the original acquisition price. The latest nationwide ROI (before accounting for mortgage interest, property taxes, renovation expenses and other holding costs) was down from 28.1 percent in 2022 and 35.7 percent in 2021, hitting the worst level since 2007. Investors saw their profit margins decrease for the sixth time in the past seven years as the median price of the homes they flipped dipped slightly faster than the median price they had paid to purchase properties – 4.4 percent versus 4 percent. “In 2023, the landscape for home flipping across the U.S. became increasingly challenging,” remarked Rob Barber, CEO at ATTOM. “Whether the overall market has soared or seen just modest gains in recent years, investors have missed out on the action.” He added that “the sharp decline in the number of home flips likely reflected a combination of a tight supply of homes for sale as well as dwindling returns. Either way, it will take some significant reworking of the financials for home flipping fortunes to turn back around.” The latest drop-off in home-flipping profits came during a year when the nation’s decade-long home-price runup began to stall, leading to the weakest annual price gains since 2012 and a slight dip in profits for sellers of all kinds. But margins for home flippers had already been declining during earlier years when the broader housing market was booming. As that happened, the profit gap between investors and all sellers gradually widened. Typical returns in 2023 remained at levels that could easily be wiped out by the carrying costs during the renovation and repair process, which usually consume 20 to 33 percent of the resale price. Home flipping rates fall in most housing markets, with biggest decreases in the South and West Home flips as a portion of all home sales decreased from 2022 to 2023 in 112 of the 212 metropolitan statistical areas analyzed in the report (53 percent). The top 25 largest decreases in annual flipping rates all were in the South and West. They were led by Gainesville, GA (rate down from 15.1 percent in 2022 to 9.9 percent in 2023); Phoenix, AZ (down from 16.3 percent to 11.9 percent); Prescott, AZ (down from 9.8 percent to 6 percent); Charlotte, NC (down from 14.2 percent to 10.6 percent) and Provo, UT (down from 10.9 percent to 7.5 percent). Aside from Phoenix and Charlotte, the biggest decreases in flipping rates from 2022 to 2023 in metro areas with a population of 1 million or more were in Las Vegas, NV (rate down from 12.2 percent to 8.9 percent); Sacramento, CA (down from 9.9 percent to 6.9 percent) and Tucson, AZ (down from 14.6 percent to 11.8 percent). Metro areas where home flipping rates increased from 2022 to 2023 were led by Macon, GA (rate up from 12.1 percent to 17 percent); Gulfport, MS (up from 3.9 percent to 7.7 percent); Jackson, MS (up from 5.8 percent to 8.4 percent); Columbus, GA (up from 10.9 percent to 13.5 percent) and Dayton, OH (up from 10 percent to 12.4 percent). Home flips purchased with financing tick upward Nationally, the percentage of flipped homes originally purchased by investors with financing increased in 2023 to 36.5 percent, up from 35.7 percent in 2022 and from 36.2 percent in 2021. U.S. Home Flipping Financing Trends Meanwhile, 63.5 percent of homes flipped in 2023 were originally bought with cash only, down from 64.3 percent in 2022 and from 63.8 percent two years earlier. Among metropolitan areas with a population of 1 million or more and sufficient data to analyze, those with the highest percentage of flipped homes purchased by investors with financing in 2023 included San Diego, CA (56.4 percent); Seattle, WA (56.1 percent); Fresno, CA (52.2 percent); Providence, RI (49.2 percent) and Boston, MA (48.6 percent). In that same group, the metro areas with the highest percentage of flips purchased with all cash included Detroit, MI (81.6 percent); Cleveland, OH (76.3 percent); Buffalo, NY (75.5 percent); Pittsburgh, PA (71.1 percent) and Birmingham, AL (70.2 percent). Typical gross profits on home flips decline in nearly two-thirds of nation Homes flipped in 2023 were sold for a median price nationwide of $306,000, generating a gross flipping profit of $66,000 above the median original purchase price paid by investors of $240,000. That national gross-profit figure was down from $70,100 in 2022 and from $75,000 in 2021, which was the highest level this century. U.S. Home Flipping Gross Profits Among the 56 metro areas in the U.S. with a population of 1 million or more, those with the largest gross flipping profits on median-priced transactions in 2023 were San Jose, CA ($275,250); San Francisco, CA ($170,000); Boston, MA ($158,000); New York, NY ($154,750) and San Diego, CA ($153,000). The weakest gross flipping profits among metro areas with a population of at least 1 million in 2023 were in Austin, TX ($18,640 loss); San Antonio, TX ($12,289 profit);
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