BAM Key Details:

  • ATTOM just released its year-end 2022 U.S. Home Flipping Report, showing a nationwide increase in home flipping—up 14% from 2021, up 58% from 2020, and reaching its highest point since at least 2005. 
  • Gross home flipping profits, however, dropped to their lowest level since 2008. 

Home flipping in the U.S. has reached its highest level since at least 2005. But according to a new ATTOM report, home flipping profits have plunged to a new low. 

The year-end 2022 U.S. Home Flipping Report shows a 14% increase in home flipping compared to the year before (2021) and a 58% increase from 2020. The number of U.S. homes flipped by real estate investors in 2022 accounted for 8.4% of all home sales—the highest share since at least 2005 and up from 5.9% in 2021 and 5.8% in 2020. 

But even as the number of home flips went up, gross profit margins on these transactions dropped to their lowest level since 2008. 

ATTOM-US-Home-flipping-gross-profits

Source: ATTOM

Here’s what you need to know. 

ATTOM’s Year-end 2022 U.S. Home Flipping Report

The report shows a total number of single-family homes and condos flipped in 2022 at 407,414—up 14% from 357,666 the year before (2021) and up 58% from 2020, rising to its highest point since at least 2005. 

Unfortunately for investors, gross profit margins haven’t followed the same trend. In fact, they’ve fallen to their lowest level in at least 15 years. 

In 2022, the typical gross profit for a flipped home was $67,900 nationwide, which was 3% less than the previous year’s average of $70,000. This resulted in a return on investment of 26.9%, down from the 32.6% return in 2021 and the 41.9% return in 2020.

Investors who flip homes have experienced a decrease in their profit margins for the fifth time in six years. This is due to the fact that the median value of the properties they flipped increased more slowly than the median prices they paid for them: 12% vs. 17%.

The shrinkage in home flipping profits in 2022 happened in a year when the U.S. housing market changed course due to soaring mortgage rates, consumer price inflation, and a slumping stock market, all of which reduced the amount home seekers could afford, cooling buyer demand and cutting into the prices investors could get on resale.

For now, the decline in home flipping profits continues to dampen enthusiasm for this niche of the housing market, though it continues to grow. Clearly, some investors are seeing better results than others, but taken as a whole, home flipping profits have been diminishing since 2017, even during times when the overall housing market was booming.

Home flipping rates are up, with biggest increases in the South and West

In 216 of the 218 metros analyzed (99%), home flips as a share of total home sales went up from 2021 to 2022. Of the 25 markets with the steepest increases in annual flipping rates, 20 were in the South and West. 

The top five markets with the biggest increases in home flipping rates:

  • Burlington, VT (rate up 283.7%)
  • Prescott, AZ (up 183.1%) 
  • Bremerton, WA (up 182.7%) 
  • Jackson, MS (up 176%)
  • Honolulu, HI (up 172.6%) 

Metros that qualified for inclusion in the ATTOM report had populations of at least 200,000 and a minimum of 100 home flips in 2022. 

The steepest increases in home flipping rates in metros with populations of one million or more were in— 

  • Honolulu, HI (up 172.6%) 
  • Sacramento, CA (up 116.4%)
  • Atlanta, GA (up 94.3%)
  • Minneapolis, MN (up 72.8%)
  • Orlando, FL (up 72.2%)

Only two metros saw a decrease in home flipping rates from 2021 to 2022: 

  • New Orleans, LA (down 8.2%) 
  • Green Bay WI (down 2.9%)

All-cash transactions go up as home flips with cash financing decrease again

Nationwide, the share of flipped homes purchased with cash financing decreased in 2022 to 35.2%, down from 35.9% in 2021 and 41% in 2020. At the same time, 64.8% of properties flipped in 2022 were purchased with all cash, up from 64.1% in 2021 and 59% in 2020. 

ATTOM_US-Home-flipping-financing-trends-chart

Source: ATTOM

Among metros with populations of one million or more (with sufficient data), those with the largest share of flipped homes purchased by investors with financing were led by— 

  • Boston, MA (53.7%)
  • San Diego, CA (51%)
  • Seattle, WA (50.8%)
  • Providence, RI (50.5%)
  • San Jose, CA (50.1%)

In that same group of metros, those with the highest share of flipped homes purchased with all cash were led by— 

  • Detroit, MI (84.7%)
  • Atlanta, GA (80.7%)
  • Buffalo, NY (80.6%)
  • Indianapolis, IN (77.4%)
  • Cleveland, OH (77.1%)

Typical gross profits on home flipping decline in half the U.S. 

Properties flipped in 2022 were sold for a median price of $320,000 nationwide, for a gross flipping profit of $67,900 above the median original price of $252,100 paid by investors. 

That national figure for gross profit was a step down from $70,000 in 2021 (the highest since at least 2005) but still higher than the $67,000 from 2020. 

ATTOM-Gross-flipping-ROI-by-price-range-chart

Source: ATTOM

Among the 56 U.S. metros with populations of one million or more (and sufficient data), those with the biggest gross home flipping profits in 2022 were led by— 

  • San Jose, CA ($242,625)
  • San Francisco, CA ($163,000)
  • Washington, DC ($146,728)
  • New York, NY (141,332)
  • Seattle, WA ($137,664)

The top five metros in this group with the lowest home flipping profits in 2022: 

  • Kansas City, MO ($26,963)
  • San Antonio, TX ($29,000)
  • Houston, TX ($29,901)
  • Indianapolis, IN ($34,532)
  • Dallas, TX ($36,970)

Home flipping returns hit lowest nationwide level in 15 years

The typical home flip in 2022 had a gross profit margin of 26.9%, the smallest ROI since at least 2005. The ROI on median-priced home flips, across the U.S., has dropped by 15% since 2020 and by 24% since 2016. 

Profit margins shrank last year as the median national resale price on flipped homes went up just 12.3% from $285,000 in 2021 to $320,000 in 2022. Compare that to the 17.3% increase in price home flippers were paying when they first bought those properties (from $215,000 to $252,100).

The typical home-flipping ROI decreased from 2021 to 2022 in 77% (168) of the 218 metros in ATTOM’s analysis. 

Among U.S. metros with populations of one million or more, those with the biggest decreases in ROI on the typical home flip were led by— 

  • Rochester, NY (ROI down from 100.4% in 2021 to 55.6% in 2022)
  • Oklahoma City, OK (down from 63.6% to 35.1%)
  • Philadelphia, PA (down from 106.3% to 78%) 
  • Richmond, VA (down from 91.4% to 68.6%)
  • Washington, D.C. (down from 61% to 42.7%)

In that same group of metros, those with the biggest increases in ROI on the typical home flip were led by— 

  • Cleveland, OH (ROI up from 26.8% in 2021 to 41.4% in 2022)
  • New Orleans, LA (up from 54.1% to 64.6%)
  • Cincinnati, OH (up from 38.4% to 47.4%)
  • Honolulu, HI (up from 5.7% to 7.4%)
  • Orlando, FL (up from 17.6% to 18.7%)

The top five metros with the largest gross profit margins in 2022 (from the same group):

  • Pittsburgh, PA (114.2%)
  • Buffalo, NY (90.7%)
  • Philadelphia, PA (78%)
  • Baltimore, MD (72.9%) 
  • Richmond, VA (68.6%)

The top five metros with the smallest gross profit margins in 2022 (from the same group): 

  • Honolulu, HI (7.4%)
  • Austin, TX (8.2%)
  • Sacramento, CA (9.4%)
  • Phoenix, AZ (10.6%)
  • Houston, TX (11.3%)

Top takeaways for real estate agents

If you’re working with real estate investors in your area, this is one report you’ll want to share with them, especially if they’ve considered home flipping as an alternative to renting out their investment property. 

Help them see the advantages and disadvantages of each investment strategy so they know what to expect if they’re ready to try something new.