ATTOM Data released its fourth quarter 2022 fix and flip data last week, providing the first look at results for all of 2022. We took a look at the data to find three highlights that tell us what’s happening and what’s changing in the fix and flip market.
The volume of flips is at a generational high
More than 407,000 flips were completed in 2022, totaling 8.4% of all home sales. This is the largest percentage in 17 years.
The continued growth in market share for flips is happening nationwide. The percentage of flips increased in 216 of 218 MSAs that ATTOM measures, and 219 counties nationwide had home flipping rates that topped 10% of all sales.
The highest flip rates are in Georgia, both in the Atlanta MSA and in Douglas, Clayton, and Lumpkin counties.
These high flip rates tell investors that competition for flips will remain fierce, as the market still sees flipping as a strong investment strategy.
Flips remain popular even as profits compress
As expected, fix and flip profits compressed in 2022. Nationwide, the average profit per flip is about $68,000, or 26.9% gross profit. Both these numbers declined from 2021.
Why did this happen? The reason is that flippers faced a perfect storm. For one thing, flips completed in 2022 were rehabbed with construction materials purchased at all-time high prices in 2021-22. Also, properties purchased in 2021 and sold in 2022 were bought as prices rose but sold as prices peaked or even started to decline in some markets. Those two major factors mean the declines in profit percentage we see the 2022 numbers were expected.
What does this mean for 2023 flips? We could see these profit numbers and percentages increase. Construction material prices are decreasing on many products, which will help tremendously. Home prices are harder to predict, but at least we know that flips purchased in 2022 and early 2023 weren’t bought in a rising home price appreciation environment. Those factors should reassure flippers, and give them confidence that they can still find deals where they can make big profits.
The Mid-Atlantic and Rust Belt remain flip profit hotbeds
Among MSAs with a population of at least 1 million, Pittsburgh, Pennsylvania, had the highest flip gross profit percentage at 114%. This meant that Pittsburgh flips more than doubled the initial investment. The next four most profitable large markets were also in a similar geographic area:
- Buffalo, New York – 90.7%
- Philadelphia, Pennsylvania – 78%
- Baltimore, Maryland – 72.9%
- Richmond, Virginia – 68.6%
These localized numbers show that flipping remains an incredibly valuable real estate investment strategy—as long as investors know their local markets and plan their strategies wisely.
As always, Lima One is eager to partner with fix and flip investors to help you profit on their next deal. We offer a variety of fix and flip loan options designed to help investors profit, with terms and rates that give credit for experience so that flippers can scale their businesses. Plus, our in-house construction management team makes it easier to profit with pre-closing budget reviews and quick construction draws to keep your project on pace for profit. Contact us today to quote financing on your next flip.