Home Flipping Dips Across U.S.
Raw Profits on Home Flips Jump to New High
By ATTOM Staff
ATTOM, a leading curator of real estate data nationwide for land and property data, released its second-quarter 2022 U.S. Home Flipping Report showing that 115,198 single-family houses and condominiums in the United States were flipped in the second quarter.
Those transactions represented 8.2% of all home sales in the second quarter of 2022, or one in 12 transactions. The latest portion was down from 9.7%, or one in every 10 home sales, in the nation during the first quarter of 2022, but still up from 5.3%, or one in 19 sales, in the second quarter of last year.
Despite the decline, the home-flipping rate during the second quarter of this year still stood at the third-highest level since 2000, below the high point registered in the first quarter of 2022.
“The second quarter was another strong showing for fix-and-flip investors. The total number of properties flipped was the second-highest total we’ve recorded in the past 22 years, and the median sales price of a flipped property — $328,000 — was the highest ever,” said Rick Sharga, executive vice president of market intelligence for ATTOM. “The big question is whether the fix-and-flip market will begin to lose steam as overall home sales have declined dramatically over the past few months, and the cost of financing has virtually doubled over the past year.”
Typical profit margins, meanwhile, rose during the second quarter of this year after six straight periods when they had fallen or virtually stayed the same.
The typical gross-flipping profit of $73,700 in the second quarter of 2022 translated into a 29% return on investment compared to the original acquisition price. While that remained down from 33% a year earlier —w and far below the peak of 53.1% this century, which hit in 2016 — the latest margin was up from 25.8% in the first quarter of 2022.
Profit margins improved in the second quarter of 2022 as median resale prices trends on flipped homes improved compared to what was happening when investors were buying homes.
Specifically, in the second quarter of 2022, the typical resale price on flipped homes reached another all-time high of $328,000. That was up slightly from $327,000 in the first quarter of 2022 and 21.5% from $270,000 a year earlier.
The quarterly gain, while tiny, was better than the 2% decline in prices that investors were seeing when they originally bought their properties. The price-change gap between buying and selling resulted in profit margins going up from the first to the second quarter of 2022.
Home flipping rates drop in 80% of local markets
Home flips as a portion of all home sales decreased from the first quarter of 2022 to the second quarter of 2022 in 161 of the 202 metropolitan statistical areas around the U.S. analyzed for this report (80%). Rates mostly were down by less than percentages points.
Among those metros, the largest flipping rates during the second quarter of 2022 were in:
» Tucson, AZ (flips comprised 14.5% of all home sales)
» Phoenix, AZ (14.1%)
» Jacksonville, FL (13.8%)
» Atlanta, GA (13.6%)
» Gainesville, GA (13.5%)
Aside from Tucson, Phoenix, Jacksonville and Atlanta, three other metro areas with a population of more than 1 million ranked in the top 10 for highest flipping rates in the second quarter. They were:
» Charlotte, NC (13.1%)
» Tampa, FL (12.2%)
» San Antonio, TX (11.9%)
The smallest home-flipping rates among metro areas analyzed in the second quarter were in:
» Honolulu, HI (1.7%)
» Hilo, HI (3.1%)
» Wichita, KS (3.5%)
» Bremerton, WA (4%)
» Seattle, WA (4.3%)
“Fix-and-flip activity is mirroring overall housing market trends, with much of the activity, and the highest returns largely coming from the West and Southeast,” Sharga noted. “In fact, even though the highest gross profits came from the most expensive states, 14 of the 18 states where flips accounted for a higher percentage of overall home sales than the national average were in the South, Southeast, and Western states.
