Real estate investors love to flip properties — buying, then quickly selling at a profit — but suddenly the profits they’re making are at a 12-year low.
Nearly one in home sales during the first quarter of 2022 was a flip, the most since 2000, and nearly two-thirds of those transactions were all cash. Average profit from flips in the first quarter were about $67,000 per deal. The sweetest spot for flipping occurred in 2016. But Richmond, Virginia, remains one of the hottest markets for flipper profit margins at 79 percent.
Successful flippers usually buy run-down properties, fix them up, and sell at a profit. Regular home buyers tend to hate flippers, who they see as competing with them for reasonably priced homes.
Why are flipping profits down? The biggest reason is that more housing inventory is appearing on the market — higher mortgage rates are slowing home appreciation, and buyers have gotten pickier and less likely to engage in bidding wars.
The report was completed by ATTOM, a curator of real estate data.
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