House flippers were exceptionally busy in the first quarter of 2022, with flips accounting for 9.6% of all single-family home and condo sales in the US. It's part of an ongoing trend, but it was still a big jump compared to 6.9% in Q4 and 4.9% in Q1 of last year, per the New York Times and a recent report from data-cruncher ATTOM. On the other hand, flippers saw their profits drop to 25.8%. That may seem like a hefty return, but it’s 14 points below last year and the lowest since 2009, when the economy was limping away from the housing meltdown. ATTOM executive Rick Sharga says a general lack of inventory contributed to the profit drop. Furthermore, there are fewer foreclosed properties available thanks to government programs. Naturally, labor and supply costs are also big factors.
The low inventory has affected many would-be buyers who actually want to live in their houses, not just use them as investment vehicles. As Axios notes, this reflects another trend dating back to 2007–2008, when institutional investors and private-equity firms started buying up all the housing stock they could, whether to flip or rent and hold. A year ago, the Wall Street Journal blamed big investors for "competing with ordinary Americans" and driving up housing prices. Now, the flipping industry is likely to cool along with the rest of the market amid rising rates and inflated costs. Per NMP, cash is certainly king, as nearly two-thirds of homes flipped in Q1 were bought with cash by investors. (More real estate stories.)
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