Your inside source for real estate, development and construction information serving the counties of Mecklenburg, Union & Iredell VOLUME 107 NUMBER 15 ■ MECKTIMES.COM
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TUESDAY, APRIL 11, 2023
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Home flipping remains up in 2022 across U.S. But gross profits fall to another low ATTOM has 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 percent from 357,666 in 2021, and up 58 percent 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 percent of all home sales, also the largest figure since at least 2005. The latest portion was up from 5.9 percent in 2021 and 5.8 percent in 2020. But even as quick buy-renovate-andresell 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 percent from $70,000 in 2021 and translated into just a 26.9 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 32.6 percent in 2021 and from 41.9 percent 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 percent versus 17 percent. 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 homeprice 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 percent of the resale price. This year will reveal more about whether investors decide to find different ways to profit from homeflipping 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 percent). 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 percent); Prescott, AZ (up 183.1 percent); Bremerton, WA (up 182.7 percent); Jackson, MS (up 176 percent) and Honolulu, HI (up 172.6 percent). 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 percent); Atlanta, GA (up 94.3 percent); Minneapolis, MN (up 72.8 percent) and Orlando, FL (up 72.2
PLEASE SEE HOME FLIPPING ON PAGE 3
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