According to ATTOM Data’s 2022 Home Flipping Report, which includes year-end data, there was a 14% increase in the number of flipped homes in 2022 compared to 2021, with 407,417 homes being flipped. Additionally, this figure is 58% higher than the number of homes flipped in 2020, and it’s the highest level of flipping seen since 2005.
Investors, including both big and small ones, flipped a considerable number of homes, accounting for 8.4% of total home sales, which is the highest percentage since at least 2005. This represents an increase from 5.9% in 2021 and 5.8% in 2020.
Despite an increase in the number of homes being flipped, the average gross profit earned from these sales was $67,900 in the latest reporting year. This represents a 3% decrease from the $70,000 profit reported in 2021. This amount equates to a return on investment of 26.9%, which is calculated before accounting for expenses like mortgage interest, property taxes, and renovation costs. This ROI is lower than the 32.6% seen in 2021 and 41.9% in 2020.
According to Rob Barber, CEO of ATTOM, home flippers faced a challenging year as profits continued to decline. For two consecutive years, more investors were flipping homes, but it was becoming harder to make quick profits. The costs associated with renovations and repairs, which typically account for 20-33% of the resale price, could easily wipe out any returns. This year will be a crucial one for investors as they decide whether to explore alternative ways to profit from home flipping or take a step back and wait for market conditions to improve.
In 2022, 64.8% of homes that were flipped were purchased using all-cash, which is an increase from 64.1% in 2021 and 59% from two years ago.