The typical profit margins for house flipping hit a low in the third quarter of 2022, according to the latest data from leading real estate data curator ATTOM.
A total of 92,422 single-family homes were flipped in Q3 2022, and the typical gross profits hit their lowest point in nearly three years. The drop in profits also marks the fastest quarterly rate of decline in profits since 2009. This totaled to a gross profit of $62,000, down 18.4% from Q2 profits of $76,000. One year ago, profits averaged $70,000.
House flips accounted for 7.5% of all home sales in Q3 2022, down from 8.2% in the previous quarter. Still, ATTOM reports house flipping remains at its third-highest level in the past 10 years. The highest point came in Q1 2022 with 9.7% of home sales.
“This is a classic good news/bad news report for fix-and-flip investors,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “While flipping activity in the third quarter was among the highest on record, gross profits and profit margins declined significantly, reflecting the overall pricing weakness in today’s housing market.”
Typical resale prices of flipped homes in Q3 2022 dropped to $310,000 from $328,000 in the previous quarter, up from $290,000 one year prior.
“With demand from buyers weakening, prices trending down over the past few months, and financing rates significantly higher than they were at the beginning of the year, flippers face a much more difficult environment today, and probably will in 2023 as well,” said Sharga.
Can I just say, GREAT!! As a professional carpenter and remodeling contractor I am happy to hear this news. Flipping is suspect at best in terms of quality, proper techniques, inspections/permits. The mere fact that a flipper looks at a home as a quick buck turnaround should make anyone extremely hesitant to purchase a flipped home. Most flipped homes we have had the misfortune of working on are money pits for the current owners. We have needed to remove improperly done work and bring homes up to code, remove poorly installed items only to find they were band aids for even worse items.
Do your due diligence! Check for permits being pulled and closed out, hire a quality inspector, and better yet, pay a quality contractor to walk through your home before you purchase it!!
Top Drawer Carpentry