Home flipping profit margins finally reverse slide in second quarter

Attom Data Solutions’ second-quarter 2022 U.S. Home Flipping Report revealed that 115,198 single-family homes and condominiums were flipped from April through June, equating to 8.2% of all home sales during that period.

That share was down from 9.7% in the first quarter of this year but up from 5.3% in second-quarter 2021. The home flip rate remains strong, although ongoing market weakness may continue to chip away at transactions, according to Rick Sharga, executive vice president of market intelligence for Attom Data.

“The second quarter was another strong showing for fix-and-flip investors,” Sharga said. “The total number of properties flipped was the second-highest total we’ve recorded in the past 22 years. … 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.”

Meanwhile, the median sales price of a flipped property hit another all-time high of $328,000. That’s up from $327,000 in Q1 2022 and up from $270,000 in Q2 2021. The gross profit on the typical fix-and-flip transaction rose to $73,700 in the second quarter, up 10% quarterly and 10.1% annually.

Typical profit margins finally reversed a six-quarter streak of either receding or staying flat from the prior three-month period. Home flippers realized a 29% return on investment (ROI) during the second quarter, down from 33% one year ago (and well below the 53.1% ROI peak reached in 2016) but up from 25.8% in Q1 2022.

Flip rates fell in 161 of the 202 metros analyzed by Attom Data, although rates were down by less than a percentage point in most markets. Tucson, Arizona, had the highest flip rate at 14.5% of all home sales, followed by Phoenix (14.1%), Jacksonville (13.8%) and Atlanta (13.6%).

“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 said. “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.”


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