Mortgage News - 9% Of Q1 U.S. Home Sales Attributed To Flippers

9% Of Q1 U.S. Home Sales Attributed To Flippers

Mortgage News July 3, 2023

According to ATTOM’s U.S. Home Flipping Report for Q1 2023, a total of 72,960 single-family homes and condominiums were flipped in the United States, accounting for 9% of all sales across the country. This figure represents a decrease from 9.4% in Q1 2022 but an increase from 8% in Q4 2022, reaching the second-highest level seen in this century.

Furthermore, the report indicated that although there was an increase in flipping activity, there were mixed results in terms of raw profits and profit margins. While both profits and investment returns experienced a slight uptick from Q4 2022 to Q1 2023, they remained relatively low compared to previous years, highlighting the continued financial challenges faced by home flippers.

In Q1 of 2023, there was a modest recovery in the typical profit margin for home flippers, which stood at 22%. This improvement came after three years of consecutive declines, predating the broader slowdown in the U.S. housing market last year.

Regarding nationwide flips, the gross profit on average transactions saw an increase to $56,000 in Q1 2023. However, this figure was 20% lower than the $70,000 reported in Q1 2022, and still remained one of the lowest points since the housing market recovery began in 2012 after the Great Recession. Nonetheless, the total profit for typical flips nationwide experienced a 4.7% increase from $53,500 in Q4 2022.

The standard gross profit of $56,000 in the first quarter of 2023 resulted in a return on investment (ROI) of 22.5% when compared to the original purchase price. While this margin was lower than the 26.9% recorded in Q1 2022 and less than half of the 51.5% level seen in mid-2020, it did show a slight improvement from 21.7% in Q4 2022.

In Q1 of 2023, there was a slight improvement in profits and profit margins for home flippers, as the median resale prices of flipped homes increased at a faster rate compared to the prices when the properties were initially purchased.

Specifically, the typical resale price rose by 1.7% from $300,000 in Q4 2022 to $305,000 in Q1 2023, surpassing the 1% increase commonly observed in median prices during property acquisition. This modest turnaround in profits deviated from the trend in the broader housing market, where investment returns had been declining for the past three years, despite traditional sellers enjoying substantial price increases and profits during a decade-long market boom.

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9% Of Q1 U.S. Home Sales Attributed To Flippers

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