Home Flippers’ Profits Drop to 13-Year Low

Home flips increased in the first quarter of 2022, but profits decreased to a 13-year low.

According to ATTOM Data Solutions, 114,706 single-family houses and condominiums in the United States were flipped in the first quarter, making up 9.6% of all home sales in the first quarter of 2022 or one in 10 purchases. This is the highest level in 22 years. The first quarter of 2022 represents the fifth consecutive quarter of rising home flipping rates.

Despite rising rates, the profit margins for home flips reached lows they haven’t seen since 2009. The gross profit was $67,000 and represented a 25.8% return on investment for the profit margin, which is down 13.1% year over year. The report theorized that resale prices are increasing more slowly then when flippers purchased the property initially. The median price of home flipped in the first quarter reached an all-time high of $327,000, up $31,000 from the previous quarter and an increase of 30.8% year over year.

The majority of investors are purchasing with cash, representing 62.7% of sales, while 37.3% were bought with financing. The time it took to flip increased slightly, taking 162 days on average, up from eight days from the prior quarter and up five days year over year.

Despite challenges, in Pennsylvania, home flippers saw financial benefits that outweighed the average across the country. In Scranton, investors saw the highest return on investment in the U.S. at 115.5%, followed by Reading at 108.6%, while Pittsburgh investors saw a 105.7% return. In Philadelphia, flippers saw a return of 80.3%, one of the highest in metros with a population of at least 1 million.