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Q2 Profits on Home Flips Hit New High

According to ATTOM’s Q2 2022 U.S. Home Flipping Report, 115,198 single-family houses and condos were flipped in the second quarter, representing 8.2% of all home sales in Q2, or one in 12 transactions. That total was down from 9.7%, or one in every 10 home sales, in the nation during Q1 of 2022, but still up from 5.3%, or one in 19 sales, in Q2 of 2021.

The Report noted that despite the quarter-over-quarter decline, the home-flipping rate during Q2 still stood as the third-highest level since 2000, below the high point registered in Q1 of 2022.

"The second quarter was another strong showing for fix-and-flip investors. The total number of properties flipped was the second-highest total we've recorded in the past 22 years, and the median sales price of a flipped property—$328,000—was the highest ever," said Rick Sharga, EVP of Market Intelligence for ATTOM. "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."

ATTOM reported that the gross profit on typical flip transactions (the difference between the median purchase price paid by investors and the median resale price) hit $73,700 in Q2, up 10% from $67,000 in Q1 of 2022, and up 10.1% from $66,944 in Q2 of 2021. Typical profit margins, meanwhile, rose during Q2 of 2022, this after six consecutive periods when they had fallen or virtually remained the same. The typical gross-flipping profit of $73,700 in Q2 of 2022 translated into a 29% return-on-investment (ROI) compared to the original acquisition price. While that remained down from 33% a year earlier–and far below the peak of 53.1% this century, which hit in 2016–the latest margin was up from 25.8% in Q1 of 2022.

In Q2 of 2022, the typical resale price on flipped homes reached another all-time high of $328,000—up slightly from $327,000 in Q1 of 2022, and 21.5% from $270,000 reported in 2021. The quarterly gain was better than the 2% decline in prices that investors were seeing when they originally bought their properties. The price-change gap between buying and selling resulted in profit margins going up from the first to the second quarter of 2022.

Home flips as a portion of all home sales decreased from Q1 of 2022 to Q2 of 2022 in 161 of the 202 metropolitan statistical areas around the U.S. analyzed by ATTOM (80%). Among those metros, the largest flipping rates during Q2 of 2022 were found in the southern U.S. states of:

  • Tucson, Arizona, where flips comprised 14.5% of all home sales;
  • Phoenix, Arizona, where flips comprised 14.1% of all home sales;
  • Jacksonville, Florida, where flips comprised 13.8% of all home sales;
  • Atlanta, Georgia, where flips comprised 13.6% of all home sales; and
  • Gainesville, Georgia, where flips comprised 13.5% of all home sales.

On the other side of the coin, the states recording the smallest home-flipping rates among metro areas analyzed in Q2 were concentrated in the Western portion of the nation with:

  • Honolulu, Hawaii, where flips comprised 1.7% of all home sales;
  • Hilo, Hawaii, where flips comprised 3.1% of all home sales;
  • Wichita, Kansas, where flips comprised 3.5% of all home sales;
  • Bremerton, Washington, where flips comprised 4% of all home sales; and
  • Seattle, Washington, where flips comprised 4.3% of all home sales.

"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 noted. "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."

Click here to view more on ATTOM’s Q2 2022 U.S. Home Flipping Report.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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