Home Flipping Remains Up In 2022
Number of Home Flips Hits Highest Level in More Than 15 Years
By ATTOM Staff
ATTOM, a leading curator of land, property, and real estate data, released its year-end 2022 U.S. Home Flipping Report, which shows that 407,417 single-family homes and condos in the United States were flipped in 2022. That was up 14% from 357,666 in 2021, and up 58% from 2020, to the highest point since at least 2005.
The report reveals that the number of homes flipped by investors last year represented 8.4% of all home sales, also the largest figure since at least 2005. The latest portion was up from 5.9% in 2021 and 5.8% in 2020.
But even as quick buy-renovate-and-resell turnarounds by investors shot up, gross profit margins on home flips in 2022 sank to their lowest level since 2008 following the second major drop in two years.
Homes flipped in 2022 typically generated a gross profit of $67,900 nationwide (the difference between the median sales price and the median amount originally paid by investors). That was down 3% from $70,000 in 2021 and translated into just a 26.9% 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 32.6% in 2021 and from 41.9% in 2020.
Investors saw their profit margins drop for the fifth time in the past six years as the median value of the homes they flipped rose more slowly than the median price they paid to purchase properties — 12% versus 17%.
The decline in home-flipping profits in 2022 continued to cast a negative light on a niche of the U.S. housing market that is growing but also struggling to figure out how to profit from changing price trends.
The latest drop-off came during a year when the nation’s decade-long home-price runup began to stall, leading to the weakest annual gains in three years and even a decline in the second half of 2022. That happened as rising home-mortgage rates, consumer price inflation and other forces cut into what home seekers could afford, reducing demand and cutting into prices investors were able to get on resale. But profits for home flippers had begun diminishing in 2017 even as the broader housing market was booming.
“Last Year, home flippers throughout the U.S. experienced another tough period as returns took yet another hit. For the second straight year, more investors were flipping but found no simple path to quick profits,” said Rob Barber, chief executive officer at ATTOM. “Indeed, returns are now at the point where they could easily be wiped out by the carrying costs during the renovation and repair process, which usually accounts for 20 to 33% of the resale price. This year will reveal more about whether investors decide to find different ways to profit from home-flipping or take a step back and wait for conditions to get better.”
Home flipping rates up in almost all housing markets, with biggest increases in South and West
Home flips as a portion of all home sales increased from 2021 to 2022 in 216 of the 218 metropolitan statistical areas analyzed in the report (99%). Among the 25 largest increases in annual flipping rates, 20 were in the South and West. They were led by:
» Burlington, VT (rate up 283.7%)
» Prescott, AZ (up 183.1%)
» Bremerton, WA (up 182.7%)
» Jackson, MS (up 176%)
» Honolulu, HI (up 172.6%)
Metro areas qualified for the report if they had a population of at least 200,000 and at least 100 home flips in 2022.
Aside from Honolulu, the biggest increases in flipping rates in 2022 in metro areas with a population of 1 million or more were in:
» Sacramento, CA (rate up 116.4%)
» Atlanta, GA (up 94.3%)
» Minneapolis, MN (up 72.8%)
» Orlando, FL (up 72.2%)
The only metro areas where home flipping rates decreased from 2021 to 2022 were:
» New Orleans, LA (rate down 8.2%)
» Green Bay WI (down 2.9%)
Typical gross profits on home flips decline in half the nation
Homes flipped in 2022 were sold for a median price nationwide of $320,000, generating a gross flipping profit of $67,900 above the median original purchase price paid by investors of $252,100. That national gross-profit figure was down from $70,000 in 2021 (the high point since at least 2005) but still up from $67,000 in 2020.
Among the 56 metro areas in the U.S. with a population of 1 million or more, those with the largest gross flipping profits in 2022 were:
» San Jose, CA ($242,625)
» San Francisco, CA ($163,000)
» Washington, DC ($146,728)
» New York, NY ($141,332)
» Seattle, WA ($137,664)
The lowest gross flipping profits among metro areas with a population of at least 1 million in 2022 were in:
» Kansas City, MO ($26,963)
» San Antonio, TX ($29,000)
» Houston, TX ($29,901)
» Indianapolis, IN ($34,532)
» Dallas, TX ($36,970)
Home flipping returns drop in three-quarters of U.S., hitting lowest nationwide level in More Than 15 years
The gross profit margin on the typical home flip in the U.S. last year fell to 26.9% — the smallest investment return since at least 2005. The ROI on median-priced home flips nationwide has dropped 15 percentage points since 2020 and is off by 24 points since 2016.
Margins fell last year as the median nationwide resale price on flipped homes increased just 12.3%, from $285,000 in 2021 to $320,000 in 2022. That was less than the 17.3% increase in the price investors were paying when they bought homes (from $215,000 to $252,100).
The typical home-flipping investment return decreased from 2021 to 2022 in 168, or 77%, of the 218 metro areas analyzed.
Among metro areas with a population of 1 million or more, the biggest percentage-point decreases in profit margins during 2022 were in:
» Rochester, NY (ROI down from 100.4% in 2021 to 55.6% in 2022)
» Oklahoma City, OK (down from 63.6% to 35.1 %)
» Philadelphia, PA (down from 106.3% to 78%)
» Richmond, VA (down from 91.4% to 68.6%)
» Washington, D.C. (down from 61% to 42.7%)
In that same group of markets with populations of at least 1 million, the largest increases in returns on investment on the typical home flips were in:
» Cleveland, OH (ROI up from 26.8% in 2021 to 41.4% in 2022)
» New Orleans, LA (up from 54.1% to 64.6%)
» Cincinnati, OH (up from 38.4% to 47.4%)
» Honolulu, HI (up from 5.7% to 7.4%)
» Orlando, FL (up from 17.6% to 18.7%)
Among metro areas with a population of at least 1 million, the biggest gross profit margins in 2022 were in
» Pittsburgh, PA (114.2%)
» Buffalo, NY (90.7%)
» Philadelphia, PA (78%)
» Baltimore, MD (72.9%)
» Richmond, VA (68.6%)
The smallest were in
» Honolulu, HI (7.4%)
» Austin, TX (8.2%)
» Sacramento, CA (9.4%)
» Phoenix, AZ (10.6%)
» Houston, TX (11.3%)
Average days to flip nationwide increases
Home flippers who sold homes in 2022 took an average of 164 days, or about five-and-a-half months, to complete the flips. That was up from 152 days for homes flipped in 2021 but still down from 182 days in 2020.
More than 200 counties had a home flipping rate of at least 10% in 2022
Among 955 counties with at least 50 home flips in 2022, there were 219 counties where flips accounted for at least 10% of all home sales last year. The top five were all in Georgia:
» Douglas County, GA (outside Atlanta) (19.5%)
» Lumpkin County, GA (north of Atlanta) (19.2%)
» Clayton County, GA (outside Atlanta) (18.6%)
» Paulding County, GA (outside Marietta) (18.5%)
» Rockdale County, GA (outside Atlanta) (18%)
