Flipping homes reached its second-highest amount in more than a century in the first quarter of this year, based on new information provided by ATTOM Data Solutions. Flips made up 9% of sales in the first quarter, according to ATTOM’s 2023 U.S. Home Flipping Report(link external). While the returns and profits on investments are rising compared to the previous year, they are still low compared to the last decade.
The profit on the typical flip during the first quarter increased to $56,000. However, this figure is down by 20 percent from $70,000 prior, according to the report of ATTOM. This figure is also among the lowest since the market started returning after its Great Recession in 2012. It is a 22.5% return on investment for the typical flip, lower than the 51.5 percent level recorded in mid-2020.
However, the most recent data indicates that “home-flipping investors across the U.S. may have finally halted the decline,” says ATTOM CEO Rob Barber. “In the initial quarter of 2018, margins for profit were showing a slight increase after a prolonged slump, and the demand for flipping homes increased for buyers. However, assuming that they’re done just yet is not a good idea.”
Barber says that the costs of home flipping are rising, which could quickly erase 22% of gross profits. But “the first-quarter trends offer some hope for investors, indicating that brighter times may lie ahead,” Barber notes.
Where to Find That Diamond in the Rough
Certain regions of the country are becoming more attracted to flipping homes. For instance, on the metropolitan level, home flips comprised the most significant part of home sales during the first quarter of these regions, as per the report of ATTOM:
- Macon, Ga.: 16.8%
- Atlanta: 15.3%
- Jacksonville, Fla.: 15.2%
- Memphis, Tenn.: 14.4%
- Clarksville, Tenn.: 14.3%
Which areas are home flipping most lucrative? The top cities include:
- Shreveport, La. Average ROI increases from 38.6 percent during the 4th quarter of 2022 to 92 percent in the first quarter of 2023.
- Lafayette, La. Up from 25.5 percent to 72.8 percent
- Savannah, Ga.: increasing from 14.3 percent to 56.8 percent
- South Bend, Ind. Up from 8.5 percent to 49.4 percent
- Peoria, Ill.: increase from 40.7 percent to 75.7 percent
The city, which is a gulf-coast town, is just the beginning, Grannan states. The brokerage has already extended south to Naples. Its Plant Your Roots program has expanded beyond Pinellas County as well. The organization planted trees in four counties surrounding it in just three months. The founder hopes it will be the case that the Plant Your Roots program becomes a national brand with affiliates across the nation.