Here's a good argument for buying an Austin home to live in rather than "investing" in one to flip: According to a new national report by real estate data company Attom, Austin home flippers saw the weakest gross flipping profits of any large city in 2023.
Of the 56 metro areas of at least 1 million people included in the report, Austin investors took a median loss of $18,640 on their home flips last year. Overall, Austin flippers' ROI dropped from a 9 percent profit in 2022 to a 4.1 percent loss in 2023, the report revealed. (Ouch!) It seems Austin's home-flipping bubble has been burst with a hammer.
Attom's latest annual U.S. Home Flipping Report, which examined the state of the home-flipping industry as a whole, showed that flipping rapidly declined nationally in 2023.
The data shows fewer than 309,000 single-family homes and condos were flipped in 2023, marking a 29.3 percent nationwide plummet in a year-over-year comparison from 2022. The report states it's the industry's worst annual drop since 2008.
Investors' profits across the U.S. also took a nosedive in 2023 – fueling feelings of disillusion within the home flipping industry.
Austin follows national trends
According to the report, "homes flipped in 2023 were sold for a median price nationwide of $306,000, generating a gross flipping profit of $66,000 above the median original purchase price paid by investors of $240,000. That national gross-profit figure was down from $70,100 in 2022 and from $75,000 in 2021, which was the highest level this century."
Investors saw a 27.5 percent ROI on their properties when compared to their original buying price last year. The 2023 nationwide ROI (before accounting for mortgage interest, property taxes, renovation expenses, and other holding costs) was down from 28.1 percent in 2022 and 35.7 percent in 2021, sinking to worst level since 2007.
"Investors saw their profit margins decrease for the sixth time in the past seven years as the median price of the homes they flipped dipped slightly faster than the median price they had paid to purchase properties – 4.4 percent versus 4 percent," a press release says.
These troubling findings all contribute to the "increasingly challenging" state of the home flipping industry, according to Attom CEO Rob Barber. Barber added that investors "missed out on the action" with the declining market in 2023.
"[T]he sharp decline in the number of home flips likely reflected a combination of a tight supply of homes for sale as well as dwindling returns," Barber said in the release. "Either way, it will take some significant reworking of the financials for home flipping fortunes to turn back around."
Texas trends
Austin wasn't the only Texas metro area where home-flippers felt a financial sting in 2023, but it was the worst.
Four Texas metros followed Austin in experiencing the lowest gross flipping profits last year (but at least they gained a little profit): San Antonio, with a $12,289 profit on home flips, followed by Dallas ($14,817 profit), and Houston ($16,932 profit).
"Among the 56 metro areas in the U.S. with a population of 1 million or more," the report says, "those with the largest gross flipping profits on median-priced transactions in 2023 were San Jose, CA ($275,250); San Francisco, CA ($170,000); Boston, MA ($158,000); New York, NY ($154,750) and San Diego, CA ($153,000)."
To read the full report and analysis, visit the Attom website.
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