Home Flipping Rises to Highest Level This Century

Sign up for insightful business news.

Missed out on a possible dream home? Don’t worry, you may have to wait just a few months before it hits the market again. Of course, you’ll likely have to pay a slightly higher price.

Roughly 10% of US homes purchased in the first quarter of 2022 were the result of a “flip” — the practice of buying and selling a new home within a year, most often after renovations — marking the highest level since 2000, according to real estate database ATTOM.

Buy the Flip

While the emotional value of a home may be incalculable, this is a story best told in numbers. Through the first quarter of the year, 9.6% of home resale transactions, good for some 114,000 single-family houses and condos, were the result of a flip, ATTOM reports. That’s about double the nearly 5% rate from the same period last year, and up from Q4 2021’s 6.9% (overall, flipping has been on the rise for five straight quarters).

The trend, in particular, is striking the housing market in bustling up-and-coming metro areas:

  • Nearly 19% of all home sales in Phoenix were flips in the first quarter. Rounding out the top five: Charlotte (18%), Tucson (16.2%), Atlanta (16.2%), and Jacksonville (16%). Olympia, Washington came in last place among metro areas analyzed by ATTOM, with flips representing just 4.4% of home sales.
  • Rising costs of building materials makes flipping homes much cheaper and easier than building a new one. In May, new home construction fell about 15% to the lowest levels in a year, according to US Department of Commerce Data, while a Freddie Mac report from last year pegged a national housing shortage at 3.8 million.

Fixed-Up: The median price of a flipped home during the period was $327,000, a significant payday over the median investor purchase price of $260,000. Meanwhile, nearly two-thirds of all flipped homes were completed with cash. Blame those deep-pocketed private equity groups next time you get outbid.

On the Flip Side: But… the market seems to be cooling. Profit margins for flippers fell in Q1 in nearly three-quarters of analyzed metro areas as mortgage rates rise and demand cools. Whether a bubble is popping is tough to say — flipping last peaked in 2005 at 8.2%, according to ATTOM, when levels reached nearly 20% in Las Vegas, Phoenix, and parts of Florida. It may be safer to keep flipping dreams relegated to the land of mindless reality TV.

Investing in the Gateway Cities to the American Dream

Demand destruction is a fallacy. Demand hasn’t evaporated, it has simply transformed.
Read More
Deep Dives more

As Job Market Cools, Small Businesses Scramble for Employees

Photo by Federal Reserve Board of Governors under Public Domain Mark 1.0

Deflation Begins to Hit Durable Goods

Recent News

HOA Fees Are Adding to the Housing Affordability Problem

Meta Files Lawsuit Arguing FTC’s In-House Courts are Unconstitutional

Billionaires Inherit More Wealth Than They Make

Google May Use Drones to Keep Data Centers Healthy