As the housing market cools, home flippers are finding it difficult to make a quick profit.

In the third quarter, real estate data provider ATTOM said gross profit, the difference between the average purchase price paid by investors and the median sales price, fell to $62,000. That was down 18.4% from the second quarter and down 11.4% year over year. It represents the smallest gain since late 2019 and the fastest quarterly decline since 2009.

As that gross margin declined, the return on investment fell to 25% from 30% last quarter. Not bad, but not as good. Still, ATTOM understands that it is not the amount of profits, but how quickly they fall.

The share of flipped home sales also fell, as profits declined and higher mortgage rates hurt buyers’ affordability. About 7.5% were reversed in the third quarter, still a record high, but down from 8.2% in the second quarter. Flips, defined as homes bought and sold in a 12-month period, accounted for 5.9% of all home sales in the third quarter of 2021.

Home prices are depreciating fast and renovation costs are high.

“It’s clear that fixed and flip investors are not immune to the dynamics in the housing market,” Rick Sharga, CEO of ATTOM Market Intelligence, said in a statement. “With buyers’ interest weakening, prices falling over the past few months, and financing rates much higher than at the beginning of the year, the sliders are facing a tough time today, and will likely be the same in 2023.”

Home prices are still higher than they were a year ago, but monthly gains are falling sharply. Mortgage rates are up from their recent highs, but still more than double what they were earlier this year. The combination led to a nine-month decline in overall home sales.

While mortgage rates have fallen slightly over the past two months, this may not matter much to flippers as 64 percent use all cash. It is unchanged from previous quarters.

Another factor weighing on investors is the cost of flipping. Labor and material costs are high, and supply chain delays still add to renovation costs. The average time it took to flip a home fell slightly to 163 days in the third quarter, marking a three-quarter high. Still, that’s longer than the 149 days it took to return home in the third quarter of last year.

The markets that showed the highest reversal rates were Phoenix; Spartanburg, South Carolina; Atlanta and Gainesville in Georgia; and Winston-Salem, North Carolina. The markets that offered the best returns were Buffalo, New York; Pittsburgh and Scranton in Pennsylvania; and Salisbury, Maryland.

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