According to ATTOM’s 2022 U.S. Home Flipping Report, 115,198 single-family houses and condos were flipped in the second quarter. That represented 8.2 percent of all home sales in the quarter, down from 9.7 percent in the first quarter but still up from 5.3 percent a year ago.
Despite the decline, the home-flipping rate stood at the third-highest level since 2000.
“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,” ATTOM Executive Vice President of Market Intelligence Rick Sharga said in a release. “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.”
The gross profit on typical house-flipping transactions reached $73,700 in the second quarter, up 10 percent from $67,000 in the first quarter and up 10.1 percent from $66,944 in the second quarter of 2021.
Typical profit margins rose during the second quarter after six straight periods when they had fallen or stayed the same. The typical gross-flipping profit of $73,700 in the second quarter translated into a 29 percent return on investment. While that remained down from 33 percent a year earlier, it was up from 25.8 percent in the first quarter.
In the second quarter, the typical resale price on flipped homes reached another all-time high of $328,000, up slightly from $327,000 in the first quarter and up 21.5 percent from $270,000 a year earlier.
Home flips as a portion of all home sales decreased from the first to second quarter in 80 percent of the metro areas analyzed by ATTOM. Among those metros, the largest flipping rates during the second quarter were in Tucson, Ariz. (flips comprised 14.5 percent of all home sales), Phoenix (14.1 percent), Jacksonville, Fla. (13.8 percent), Atlanta (13.6 percent), Gainesville, Ga. (13.5 percent), Charlotte, N.C. (13.1 percent), Tampa, Fla. (12.2 percent) and San Antonio, Texas (11.9 percent).
The smallest home-flipping rates were in Honolulu (1.7 percent), Hilo, Hawaii (3.1 percent), Wichita, Kan. (3.5 percent), Bremerton, Wash. (4 percent) and Seattle (4.3 percent).
“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 said. “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.”
House-flipping profit margins increased from the first to second quarter in 60 percent of the metro areas analyzed.
The biggest quarterly increases in profit margins came in Huntsville, Ala. (ROI up from 18.2 percent to 84.5 percent), Tallahassee, Fla. (up from 42.1 percent to 94.6 percent), Buffalo, N.Y. (up from 88.2 percent to 133.3 percent); Canton, Ohio (up from 22.8 percent to 63.9 percent) and Fort Smith, Ariz. (up from 38.7 percent to 76.6 percent).
Markets with the largest ROI for typical home flips in the second quarter were Buffalo, N.Y. (133.3 percent return), Pittsburgh (127.3 percent), Lake Charles, La. (125.5 percent), Scranton, Pa. (109.9 percent), Harrisburg, Pa. (96 percent), Philadelphia (82.1 percent), Detroit (77.8 percent) and Baltimore (73.5 percent).
Metro areas with the smallest profit margins on typical home flips were Tyler, Texas (1.4 percent return), Jackson, Miss. (1.9 percent), Boise, Idaho (4.5 percent), Medford, Ore. (8.6 percent) and Lafayette, La. (9.7 percent).
The highest raw profits on median-priced home flips in the second quarter were in San Jose, Calif. (typical gross profit of $292,500), San Francisco ($250,000), Salinas, Calif. ($203,125), San Diego ($177,000) and Seattle ($174,999).
The lowest raw profits on typical home flips were in Tyler, Texas ($4,000), Jackson, Miss ($5,223), Lafayette, Ind. ($15,518), Boise, Idaho ($20,133) and Lexington, Ky. ($23,500).
Nationwide, 60.3 percent of homes flipped in the second quarter were purchased by investors with cash, down from 63.2 percent in the first quarter and 60.9 percent a year ago. Metros with the highest percentage of flips purchased with cash were Buffalo, N.Y. (80 percent), Detroit (77.7 percent), Tucson Ariz. (76.4 percent), Cincinnati (74.7 percent) and Cleveland (74.5 percent).