ATTOM Data released its second quarter 2022 Fix and Flip data, giving us insight into trends in the housing market. Here’s what we learned from their most recent data:
1. Fix and Flips Continue to Be a Significant Portion of the Housing Market
In Q2, 8.2% of all home sales nationally were fix and flips. While this number was down from Q1’s 9.7% (a 20-year high), it is still the third highest percentage since 2000.
What It Means: The number of fix and flips has grown and should continue at near record pace for the quarter of come. This illustrates how plenty of opportunity exists in the market for flippers.
2. Profits and ROI Are Up and Trending Up
Both gross profits and ROI on flips were up quarter over quarter. Gross profit hit $73,700 in Q2, a 10% increase over Q1. ROI picked up to 29%, up from 25.8% in Q1.
What It Means: Home Price Appreciation led to an all-time high in average resale price—which has allowed flippers to make more money despite high construction material costs. Profits may decrease over the rest of 2022 as HPA flattens or dips, but we should see better profit numbers (both gross and ROI) in 2023 because those flips will benefit from lower material costs throughout the course of the flip project.
3. More Flips Are Being Financed
Nearly 40% of all flips were financed in Q2, one of the highest percentages in recent years. That was up from 37% in Q1.
What It Means: Increasing home prices have made it harder for flippers to finance with cash. As prices peak, investors may be able to self-finance more flips—which should increase the overall number of flip projects.
The Bottom Line for Fix and Flip Investors
The fix and flip market was squeezed in 2020-22 as home prices spiked and bidding wars erupted. But that housing market has passed, and now the environment is much more favorable for flippers. Investors still need to watch their numbers carefully as they purchase properties and be confident that the improvements they make will add value.
But careful investments in the fix and flip market should lead to solid returns. So while the housing market seems to be tumultuous, fix and flip investors can be confident in the strategy if they execute on solid project plans.
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