Real estate prices have skyrocketed in the past two years. In each month of this year so far, they have risen about 20% year over year, according to the carefully followed S&P Case-Shiller survey. In cities such as Tampa and Phoenix, the figure is closer to 30%.

Much of the increase in prices is due to mortgage rates that were as low as 3% for a 30-year fixed-rate mortgage, though that rate has since nearly doubled. This is likely to cool off the market. Moody’s recently reported that home price increase rates will drop across the country.

Another reason home prices have risen in some areas is that the pandemic allowed people to relocate because of the work-from-home environment. Many left large cities and moved to smaller ones where prices were lower.

Not everyone who has bought a house recently did so to live in it. Some are investors who buy homes to “flip” them quickly at a higher price. When prices were climbing rapidly, this was an extremely profitable business. It remains to be seen if that is true as prices level off.

The profits investors can make vary widely from city to city. The headline to the recently released first-quarter 2022 U.S. Home Flipping Report from real estate research company ATTOM was “Home Flipping Spikes Across U.S. in First Quarter of 2022 but Profits Drop to 13-Year Low.”

A total of 114,706 homes and condos were flipped nationwide in the first quarter. This was 9.6% of all home sales transactions during the period. Rick Sharga, executive vice president of market intelligence for ATTOM commented: “The good news for fix-and-flip investors is that demand remains strong from prospective homebuyers, as evidenced by this quarter’s report, which shows that one of every 10 homes sold during Q1 was a flip.” He also commented that higher mortgage rates would slow the pace.

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The report looked at 191 metropolitan statistical areas, and 139 had enough data to be included in the analysis. In the first quarter, the average return on investment nationwide was 25.8%.

Several cities had triple-digit returns for the period. Of the top five, three were in Pennsylvania —Scranton (115.5%), Reading (108.6%) and Pittsburgh (105.7%) — while the others were in Tennessee — Kingsport (114.0%) and Johnson City (101.1 %).

Another notable conclusion from the study is how few of the flipped homes carried mortgages. Nationwide, 62.7% of the home flipped were bought using cash.

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