As most would expect, last year was a disappointing year for home flipping, as affirmed by ATTOM’s 2023 U.S. Home Flipping Report.
The firm’s data show that 308,922 single-family homes and condos in the U.S. were flipped in 2023 – down 29.3% from 436,807 in 2022 and the largest annual drop since 2008.
The report further reveals that as the number of homes flipped by investors declined, so did flips as a portion of all home sales, from 8.6% in 2022 to 8.1% last year.
In yet another sign of down times for the home-flipping industry, profits and profit margins also sank on quick buy-renovate-and-resell projects.
The average gross profit for a typical home flip in 2023 fell to $66,000, down from $70,100 in 2022, ATTOM says.
The average rate of return on a typical home flip was 27.5%. That’s down from 28.1% in 2022 and 35.7% in 2021, hitting the worst level since 2007.
“In 2023, the landscape for home flipping across the U.S. became increasingly challenging,” says Rob Barber, CEO at ATTOM, in the report. “Whether the overall market has soared or seen just modest gains in recent years, investors have missed out on the action.”
Lack of inventory and ever-rising home prices are the main factors impacting the home flipping business.
Barber says it will “take some significant reworking of the financials for home flipping fortunes to turn back around.”
ATTOM notes that margins for home flippers had already been declining during earlier years when the broader housing market was booming. As that happened, the profit gap between investors and all sellers gradually widened.
Typical returns in 2023 remained at levels that could easily be wiped out by the carrying costs during the renovation and repair process, which usually consume 20% to 33% of the resale price.
Photo: Luis Georg Müller