While 7.5% of all home sales in the third quarter of 2022 were flips, home flippers weren’t seeing as much of a profit.
According to ATTOM, home flips were up from 5.9% year over year, but down from 8.2% in the second quarter. The gross profit for an investor was $62,000, down 18.4% from $76,000 in the second quarter of 2022 and down 11.4% from $70,000 year over year. This is the lowest gross profit in nearly three years. Investors’ return on investment also declined. The average return on investment was $62,000, down from 30.2% in the second quarter and down from 31.8% year over year. The return on investment is the lowest in 13 years.
Additionally, the average flipped home sold for $310,000, down from $328,000 (5.5%) in the second quarter. However, it was up year over year, as in the third quarter of 2021, the typical flipped home sold for $290,000, making it a nearly 7% increase. All-cash purchases from investors remained stable, nearly two-thirds (63.7%) of homes flipped were bought by the investor with cash. And home flippers are moving quickly, the average flip took 163 days on average.
With declining profits, flipping has seen a decrease in 68% of markets. In nearly half (47%) of counties, investors’ return on investment were below the national average of $25,000. Harrisburg, specifically, saw investors’ return on investments decline from 95% to 53.8%. However, in the majority of other Pennsylvania cities, flippers’ return on investment were much higher than the national average. In Pittsburgh, return on investment for flippers was 116.9%, in Scranton, it was 88.7%, in Reading it was 86.7% and in Philadelphia, it was 77.5%. Notably, Philadelphia offered the highest return on investment for a city with at least 1 million residents.