Fix and Flip

Some New (And Old) Findings From 2nd Quarter 2023 Fix and Flip Data

ATTOM data recently released its latest fix and flip data, covering the second quarter of 2023. Here is the latest that real estate investors need to know.

More investors are using financing as the percentage of homes flipped holds steady

The percentage of investors using financing increased more than 3 percentage points over the 1st quarter 2023; from 34% to 37.4%. That’s a much larger increase than the modest 0.4% jump from 4th quarter 2022 to 1st quarter 2023.

Additionally, more houses were flipped in the most recent quarter than the previous quarter. While we know that warmer months regularly bring in more flipped homes, the percentage of homes flipped (8%) in relation to all home sales is essentially the same as the same quarter a year ago.

Analysis: The steady percentages of homes flipped and multiple quarters with increases of investors using financing signifies that investors are still finding great investments and delivering higher profits (see next section), but they also need more financial partnership in tight real estate markets with low inventory and somewhat stable home prices.

The south continues to see the most of metros with the highest flip rates, with Georgia simply dominating, but one midwest metro (Akron, OH) made it into the Top-5

• Macon, GA = 16.8% (2nd quarter in a row in first place)
• Columbus, GA = 15.3%
• Spartanburg, SC = 13.5%
• Atlanta, GA = 13.5%
• Akron, OH = 12.5%

Flip profits increased considerably and have increased for 2 consecutive quarters

The Numbers: Flip profit averages increased from $56,250 to $65,500 quarter over the quarter. The $9250 national average profit increase is more substantial than the previous quarter’s increase of less than $3000. Nationally, flipped homes were bought at a slightly lower price than the previous quarter and were also subsequently sold for more.

Analysis: This is great news for investors because even with flat to slight increases in home prices nationally in recent months, investors were able to negotiate the purchase of investment properties at a 1% lower rate than the previous quarter. Additionally, those flipped homes were sold at a 1% higher rate than the previous quarter.

63% of metros showed increased profits (also a slight increase from the previous quarter), and this time the top markets for largest gross profit gains over the previous quarter are across multiple regions within the U.S.

• Trenton, NJ
• Akron, OH
• Montgomery, AL

Affordable markets continue to prove profit margin supremacy

Once again, among large metros Rust Belt markets shine when considering overall profit percentage. These affordable markets, with the average home price below $250,000, have continually shown the most lucrative in terms of profit percentage. Pittsburgh and Baltimore have now been 1st and 2nd in multiple quarters, and Pittsburgh has even increased in profit percentage since the previous quarter (109.8% to 112.9%). Richmond, VA joins the most recent top-5 list, a departure from thistraditionally Rust Belt-dominanted list.

• Pittsburgh - 112.9% profit percentage
• Baltimore - 79.3% profit percentage
• Philadelphia - 76.9% profit percentage
• Rochester, NY – 76.2% profit percentage
• Richmond, VA – 75.5% profit percentage

Analysis: Even though more affordable markets may result in higher profit percentages, traditionally high-priced markets on the east and west coast can still realize bigger total profits due to large purchase and sell dollar amounts.

Analysis by Dameion Kennedy of Lima One’s market research analysis team.