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Investors Are Flipping Houses at a Faster Pace, but Profits Are Falling

Market Data + Trends

Investors Are Flipping Houses at a Faster Pace, but Profits Are Falling

Shrinking supply and elevated costs posed challenges for investors flipping houses at the start of 2022

June 30, 2022
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A recent report from real estate data analytics firm Attom revealed that 114,706 single-family houses and condos were flipped during the first quarter of 2022, representing 9.6% of all transactions during that period. Despite a growing flip rate, the return on investment for Q1 deals dropped to 25.8 percent, a 13-year low likely caused by a lack of inventory, The New York Times reports.

A smaller profit margin is likely the consequence of inflated mortgage rates slowing demand from budget-conscious buyers. Investors have responded to strong housing demand throughout much of the COVID-19 pandemic, but that could change as an affordability crisis widens and buyers pull back. 

The shrinking profit margin for “fix-and-flip” investors can be traced to a lack of inventory, said Rick Sharga, the executive vice president of market intelligence at Attom, caused in part by rising mortgage rates. “People are staying in their current house because they don’t want to trade a 3 percent mortgage for a 6 percent mortgage,” he said.

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