Home Flipping Declines Across U.S., Investor Profits Hit 13-Year Low

The number of single-family houses and condominiums that were flipped in the third quarter accounted for 7.5% of all home sales — or 1 in 13 transactions, according to real estate data curator ATTOM’s 2022 U.S. Home Flipping Report.

That’s down from 8.2% or 1 in 12 home sales during the second quarter, according to the report. Even so, the rate of home flipping during the third quarter was still at the third-highest level in the past decade. The high of 9.7% was reached in the first quarter of this year.

“This is a classic good news/bad news report for fix-and-flip investors,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “While flipping activity in the third quarter was among the highest on record, gross profits and profit margins declined significantly, reflecting the overall pricing weakness in today’s housing market.”

Of the 92,422 homes flipped in the third quarter, 9.1% were sold to buyers using loans backed by the Federal Housing Administration. That was up from 7.6% in both the prior quarter and the third quarter of 2021.

Investor Profits Down 

As home sales by investors declined, so did the profits on those deals, hitting their lowest point in nearly three years. With the national housing market boom stalling, gross flipping profits declined in the third quarter at the fastest pace since 2009. Profit margins on flips during the third quarter hit their lowest point in 13 years.

The typical transaction’s gross profit — the difference between the median purchase price investors pay and the median resale price — decreased by $62,000 in the third quarter, down 18.4% from $76,000 in the second quarter.

“It’s apparent that fix-and-flip investors aren’t immune to the shifting conditions in the housing market,” Sharga said. “With demand from buyers weakening, prices trending down over the past few months and financing rates significantly higher than they were at the beginning of the year, flippers face a much more difficult environment today and probably will in 2023 as well.”

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