House flipping down nearly 30% as profits drop, data reveals

New data showed a significant decrease in house flipping last year – the latest annual drop since 2008. 

According to ATTOM, a curator of real estate data, 308,922 single-family homes and condos were flipped in the United States in 2023 – down 29% from 436,807 in 2022.

And, 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, the data, published last month in ATTOM’s U.S. Home Flipping Report, revealed. 

Profits on home flips decline in two-thirds of U.S. 

Profits and profit margins also sank on quick buy-renovate-and-resell projects. Gross profits on typical home flips in 2023 dropped to $66,000 nationwide – down from $70,100 in 2022 and $75,000 in 2021.

In addition, the latest nationwide return on investment (ROI) was down from 28.1% in 2022 and 35.7% in 2021 – the smallest investment return since 2007.

Kitchen renovation.

(File: Malkovstock / iStock / Getty Images Plus)

"In 2023, the landscape for home flipping across the U.S. became increasingly challenging," Rob Barber, CEO at ATTOM, said in a statement. "Whether the overall market has soared or seen just modest gains in recent years, investors have missed out on the action."

Among metro areas with a population of at least 1 million, the biggest gross profit margins in 2023 were in Pittsburgh, Pennsylvania;  Buffalo, New York; Baltimore, Maryland; Richmond, Virginia and Philadelphia, Pennsylvania. 

Meanwhile, the worst profit margins were in Austin, Dallas, San Antonio and Houston Texas, along with Salt Lake City, Utah. 

Home flipping rates see largest decrease in South, West

Home flips as a portion of all home sales decreased from 2022 to 2023 in 112 of the 212 metropolitan statistical areas analyzed in the report. 

The data found that the largest decreases in annual flipping rates were all in the South and West. They were led by Gainesville, Georgia; Phoenix and Prescott Arizona; Charlotte, North Carolina and Provo, Utah. 

Aside from Phoenix and Charlotte, the biggest decreases in flipping rates from 2022 to 2023 in metro areas with a population of 1 million or more were in Las Vegas, Nevada; Sacramento, California and Tucson, Arizona. 

Barber added that "the sharp decline in the number of home flips likely reflected a combination of a tight supply of homes for sale as well as dwindling returns. Either way, it will take some significant reworking of the financials for home flipping fortunes to turn back around."

In 2023, the combination of high home prices and mortgage rates put a pause on the average homebuyer who typically moved into a bigger space.

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"We didn't feel the effect immediately through 2020 to 2022 because so many Americans have moved to less expensive cities. But now, as there is more return-to-the-office, we are seeing more people trying to afford a Seattle, a Denver, a Portland to Dallas, even, and struggling to do it," Redfin CEO Glenn Kelman explained in August. "So what we need to do is just build more houses."

This story was reported from Los Angeles.