Home flips pay off big in Hartford — if you can find one to flip

HARTFORD — Pat Funaro and his partners never had to advertise their house-flipping businesses before this year — now their faces are looming over Interstate 91 north on a giant billboard.

“It’s a more challenging market than it’s ever been,” said Funaro, who owns Hamden-based Home Remedies with two others. “It’s extremely challenging to find a deal.”

Funaro’s experience reflects a national trend in house-flipping, which in many cities across the U.S. showed sharp declines in the number of homes flipped.

Only 308,922 single-family homes and condos were flipped in 2023, according to real estate data analyst Attom, a 29.3 percent decline compared to 2022 and the largest annual drop since 2008.

Home flips, defined as “quick buy-renovate-and-resell projects,” also resulted in significantly lower profits and profit margins in most U.S. cities, according to Attom.

“The 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,” said Attom CEO Rob Barber. “Either way, it will take some significant reworking of the financials for home-flipping fortunes to turn back around.”

Despite national profit declines, greater Hartford is one of the few major markets in the country to show an increase in returns on investment for typical home flips, up from 48.5 percent in 2022 to 56.4 percent in 2023.

That likely reflects Hartford’s surging home values and the low inventory that is helping to push up prices: Greater Hartford topped Zillow’s national ranking of large markets with the highest year-over-year home value growth in 2023.

Homebuyers are also increasingly interested in greater Hartford, with three towns in the region topping a national list of the most searched-for communities on one major real estate site last year.

The inventory of homes for sale in the Hartford area remains low, especially in the $300,000 to $400,000 price range of first-time buyers, said Patricia Deperry, president-elect of the Greater Hartford Association of Realtors.

The number of offers on available homes has declined slightly, Deperry said, although she recently sold a property in Farmington that attracted 89 offers due to its $300,000 price tag. Winning bidders are making cash offers and first-time buyers are often shut out, she added.

House-flippers are facing low inventory and higher costs along with the rest of the real estate industry but those with in-house contractors can benefit from high buyer demand, Deperry said.

“Most of the buyers do not want to buy a house that needs work, they’re paying the extra to have a house that’s redone,” Deperry said. 

Finding a home to flip has become difficult even for professionals, Funaro said — and in part he blames HGTV. 

“Because of the shows, everyone thinks that they can flip a house … they overpay for property, they underestimate the repair costs, and they overestimate what they can sell them for, and then they get themselves into trouble,” Funaro said. “But in the meantime, they’re taking deals away from investors like myself that aren’t going to overpay.”

Greater Hartford is an attractive market for home-flippers like Funaro, who said he also seeks deals in Middlesex and New Haven counties. He just finished a home flip in Avon, and said that returns are good on his projects across the state, especially for flipped homes priced below $600,000, which is considered mid-priced in most of Connecticut.

“There’s so little inventory, and you can get a premium for the properties,” Funaro said. “So we’re doing fewer houses now than we had done, but each one is more profitable.”

As for the billboard, Funaro said he had gotten several media calls in the three months it’s been up, and one lead on a home from a friend who saw his photo on the highway.

Home Remedies once got most of its business from word of mouth, but the tight market has Funaro and his partners looking for new ways to reach home sellers. 

“We’re just trying something else,” Funaro said. “It’s more challenging now to find the deal than it’s ever been.”