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Home flipping reached record highs in Columbus and throughout Ohio last year, as investors took advantage of unprecedented housing demand and low interest rates early in the year.
Last year, 20,521 Ohio homes were flipped, up 32% from 2021 and the highest level since the property information service Attom started tracking flips in 2005. Attom, based in California, defines flipped homes as any home bought and sold within 12 months.
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“The last few years have been phenomenal,” said Craig Buehler, a partner in Powell Buehler Group, a Columbus real estate firm that helps investors and others buy and sell homes.
“I helped tons of clients last year, investors from California and elsewhere,” he said. “They used to look at other, bigger, markets, but are now looking at the Midwest, where returns tend to be better.”
Investors drawn to Ohio
Columbus isn’t the only Ohio city to attract investors last year. In fact, every Ohio city tracked by Attom posted record levels of flipped homes last year except Youngstown.
In the Columbus area, Attom reports 4,156 homes were flipped, up about 28% from the previous year. Elsewhere in Ohio: Akron had 1,311 flipped homes (up 29% from 2021); Canton, 736 (up 15%); Cincinnati, 4,414 (up 45%); Cleveland, 3,466 (up 66%); Dayton, 1,754 (up 73.5%); and Toledo, 1,096 (up 29%).
The jump in Ohio home-flipping mirrors a national jump. Across the U.S., 407,417 single-family homes and condos were flipped last year, up 14% from 2021 and also the highest level since Attom started tracking it.
Investors are drawn to Columbus because of the great demand for housing and because homes are relatively cheap, said Vena Jones-Cox, executive director of the Community of Real Estate Entrepreneurs (COREE), an investment association with nearly 1,000 members based in Columbus.
“There’s a lot of older housing stock that has never been fully updated to modern wiring, plumbing, etc., much less to meet today’s buyer’s cosmetic desires,” she said.
Buehler said some big development projects, especially Honda’s battery plant and Intel’s semi-conductor factories, have also made central Ohio more attractive to investors. Buehler’s firm itself just opened an office in Johnstown to cater to demand for housing near the Intel plant.
Flipped homes represented 8.4% of U.S. home sales last year, the highest level Attom has recorded.
In Ohio, flipped homes accounted for 9.6% of all sales. Cincinati, where 11.2% of home sales last year were flipped, led the state.
Buehler noted that while the investment market is strong in Columbus, Attom’s numbers could be inflated by the rise of real-estate “wholesalers,” who might buy a home and quickly sell it to the actual investor, thus appearing as two “flips.”
Attom records homes as flipped when they are sold, so many of the homes reported as flipped last year were bought early in the year or in 2021.
Interest rates push some investors out
Another report, by the real estate service Redfin, concludes that the number of homes bought by investors in Columbus and elsewhere declined dramatically in the second half of last year, as home prices and interest rates climbed and more buyers headed for the sideline. In the last three months of 2022, the number of Columbus-area homes bought by investors dropped 42% from the same period a year ago, according to Redfin.
“Interest rates for mortgages climbed to a level where buying and renting a property at current prices became unaffordable, making buy-and-hold investors simply unable to make rentals work,” said Jones-Cox.
“Investors who do buy and sell are taking a more conservative, wait-and-see approach because since home buyer rates have now more than doubled, we all expect prices to go flat or even decline a bit,” she said. “Buying, rehabbing, and selling a property takes 3-9 months, depending on the scope of the rehab, and not knowing what the property might be worth at the end of that time is scary.”
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Investors make less money
Even though home-flippers were unusually active last year, they did not make as much money as before. Attom found that investors paid a median of $252,100 for homes that they later sold for $320,000. That margin of $67,900 is the lowest level since 2008, according to Attom, which does not measure money investors put into the homes for repairs and renovations.
“Last year, home flippers throughout the U.S. experienced another tough period as returns took yet another hit. For the second straight year, more investors were flipping but found no simple path to quick profits,” Rob Barber, chief executive officer at Attom said in a news release.
“Indeed, returns are now at the point where they could easily be wiped out by the carrying costs during the renovation and repair process, which usually accounts for 20 to 33% of the resale price.”
In the Columbus area, investors fared worse, Attom said. They paid a median of $171,000 for homes that they later sold for $235,000, a margin of $64,000.
A typical Columbus flipped home
The typical flipped home in Columbus was built in 1968, includes 1,280 square feet and took 145 days to flip.
Home flipping has been common in central Ohio for years, but draws mixed reaction. While some homeowners welcome the practice in their neighborhood because it elevates real-estate values, others believe it can damage neighborhoods by forcing out long-term tenants.
jweiker@dispatch.com
@JimWeiker
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