Home Flipping Plummets as Profits Slump, Report Says

(3/22/24)  Thinking about flipping homes to make some quick cash? Well, think again.

Many TV shows romanticize the idea of picking up a house that needs some TLC, putting in elbow grease to restore it and then selling it for a huge profit. But flipping a home successfully takes time, experience and money, and even then, you’re at the mercy of rising labor and material costs, not to mention insurance, and subject to the supply-and-demand conditions in your particular market.

Plus, home flipping may not be as lucrative as it appears.

On March 21, real estate data firm ATTOM released its year-end 2023 U.S. Home Flipping Report, which showed that 308,922 single-family homes and condos in the United States were flipped in 2023. That number was down 29.3 percent from the number flipped in 2022 – the largest annual drop since 2008.

More importantly, in addition to the decline in the number of homes flipped by investors, profits and profit margins also dropped for these projects.

Gross profits on typical home flips in 2023 dropped to $66,000 nationwide. That was down from $70,100 in 2022 -- and translates into a 27.5 percent return on investment, down from 28.1 percent in 2022 and 35.7 percent in 2021, hitting the worst level since 2007.

“In 2023, the landscape for home flipping across the U.S. became increasingly challenging,” said Rob Barber, ATTOM’s chief executive officer. “Whether the overall market has soared or seen just modest gains in recent years, investors have missed out on the action.”

Barber said that the decline in the number of home flips was due to a combination of the low inventory of homes for sale as well as dwindling returns, adding: “Either way, it will take some significant reworking of the financials for home flipping fortunes to turn back around.”