Home Flipping Grows But Is Less Profitable in Q1

Home flipping got a lot more popular in the first quarter of 2022 but also was a lot less profitable, according to ATTOM’s U.S. Home Flipping Report…(ATTOM)

• In total, 114,706 homes were flipped in the first quarter of 2022, representing 9.6% of all home sales.

• This was up from last the quarter (6.9%) and is close to double what was reported in the first quarter of 2021 (4.9%). In fact, this was the highest level since at least 2000.

With home prices, borrowing costs, and activity rising, home flipping profitability fell to a 13-year low…

• The gross profit on typical transactions stood at $67,000 in the first quarter of 2022.

• This was up 5.5% from the $63,500 reported in the last quarter it was down 4.3% compared to the $70,000 recorded in the first quarter of 2021.

NOTE: Profit margins fell for the sixth quarter in a row to an ROI of just 25.8%. This was down from the fourth quarter of 2021 (27.3%) and from the one year ago (38.9%). Profit margins now sit at the lowest point since the first quarter of 2009.

ANOTHER NOTE: Home flippers who sold properties in the first quarter of 2022 took an average of 162 days to complete the transactions. While that was less than the historical averages, it was still up from an average of 154 in the fourth quarter of 2021 and 157 in the first quarter of 2021.

Rick Sharga, executive vice president of market intelligence for ATTOM, said Q1 was both good and bad for flippers…

• “The good news for fix-and-flip investors is that demand remains strong from prospective homebuyers…The bad news is that rising mortgage interest rates are beginning to slow down home price appreciation rates, and buyers have become more selective – and less willing to outbid other buyers for properties they’re interested in. This is having a predictable impact on profit margins for investors.”