Home flipping flops in 2023. Profit margins fall to the lowest level since the Great Recession

The home-flipping craze has hit a financial crunch, as profit margins are getting squeezed between the purchase and the sales price.

Almost 309,000 homes nationwide were flipped in 2023, a 29% decline from a year ago – the largest drop since 2008, when the Great Recession and the housing market collapse roiled the economy, according to ATTOM Data

The dramatic decline is likely from a combination of a “tight supply of homes for sale as well as dwindling returns,” says ATTOM CEO Rob Barber.


Profits and profit margins – the percentage return on the investment – also plummeted. The average home-flipper had a profit of $66,000 in 2023, compared to $70,100 in 2022. The 27.5% return on investment last year was the lowest since 2007, and compares to the 28% a year earlier and 36% in 2021. 

So, about the profit margin figure …

ATTOM Data’s profit figure is based on the purchase and sales price of the home, and does not take into consideration other costs, including property tax, renovation, mortgage interest and real estate commissions. Depending on these factors, a flipped home could yield a small profit – or even a loss – for flippers.

Profit margins have declined six of the past seven years, the latest evidence that the home-flipping get-rich craze – spurred, at least in part, by shows on HGTV and DIY networks – has flopped. 

“In 2023, the landscape for home flipping across the U.S. became increasingly challenging,” Barber says.


The challenge has been especially hard in California, with fewer homes available to buy and a more volatile price market. Fortunately, many flippers – and many wanna-be flippers– are hitting the pause button or walking away altogether.

California’s flipped home sales – homes bought, renovated and sold within a year – dropped 9.5% to 23,429 homes in 2023.

The state’s average flipped home had a $95,000 profit and a 16% return on investment, compared to 15.5% in 2022, according to ATTOM. The current environment is a big step away from the home-flipping market of several years ago, when home-flippers could plan on an at least 50% return on their investment.

Only two of the eight metros surveyed in California – Bakersfield and Fresno – generated returns on investment that surpassed the national average. The Central Valley cities have enjoyed home flipping success for the past several quarters, thanks to still-affordable home prices, at least compared to the Bay Area and Southern California.

However, all eight metros easily exceeded the $66,000 profit, with San Jose the nationwide leader at $275,250. San Francisco and San Diego also cracked the top five metros with the most dollars in the pocket of sellers (see table, below).

Half of the eight metros in the state had returns of less than 20%, with Los Angeles faring the worst at 14%. Low double-digit gains likely generated little, if any, profits for sellers.

Until the housing market improves and more homes are available to buy, home-flipping remains an even greater risk for those who dream of buying, flipping and getting a head-turning profit.

“It will take some significant reworking of the financials for home flipping fortunes to turn back around,” Barber says.

MetroFlipped home salesCompared to a year agoProfitProfit margin
Los Angeles8,024-3.0%$111,75014.2%
San Diego2,217-12.4%$153,00021.6%
San Francisco1,645-8.8%$170,00019.3%
San Jose604-8.7%$275,25023.7%

Source: ATTOM Data

A wildfire burns out of control near Bidwell Bar Bridge in Oroville. SHUTTERSTOCK

State Farm slams the door on 72,000 more policies, creating  challenges for homeowners seeking coverage 

Insurance giant State Farm’s decision to not renew about 72,000 insurance policies in California will leave homeowners and apartment building owners scrambling for another option, the latest move in the state’s insurance crisis.

State Farm had already announced plans to stop writing new insurance policies last summer in California, a major blow for first-time homebuyers looking to bundle their auto and homeowners’ policies. The move came after Allstate and State Farm had already asked the state’s insurance regulators to approve 40% and 28% rate increases, respectively.

But even with the hefty rate increase, the risk for a catastrophic financial loss from a natural disaster and higher repair costs pose serious threats for the insurance industry, homeowners – and the state. State Farm alone has lost $13 billion during the past two years.

The company “takes seriously our responsibility to maintain adequate claims-paying capacity for our customers and to comply with applicable financial solvency laws. It is necessary to take these actions now.”


Perhaps necessary but a pain for policyholders, many who have been longtime customers of State Farm. Homeowners are left looking for coverage – hopefully at semi-affordable rates – before this summer. More than 100 companies, including Geico and Progressive, continue to write new homeowners’ insurance policies in California.

The cost for those policies could be a challenge. California homeowners with existing homeowners’ policies have some of the lowest annual premiums in the nation at $1,300 compared to $2,000 nationwide – and $4,000 in hurricane-ravaged Florida, according to the Insurance Information Institute. 

Half of the state’s 20 most destructive fires have occurred in the past five years. ADOBE STOCK

But the cost for new customers – such as families who become first-time homeowners or won’t have their policy renewed by State Farm – is much higher, as the insurance companies attempt to offset the devastating financial losses from wildfires in recent years. 

The average California homeowner’s insurance premium increased about 13% during the past year, compared to 19% nationwide, according to a new Guarantee Rate Insurance report. Homeowners in Louisiana and Mississippi endured 30%-plus rate increases during the past year.


But climate change could flip the script in California, as the risk from natural disasters – specifically wildfires, floods and mudslides – increases down the road.

Half of the state’s 20 most destructive wildfires, based on structures lost, have occurred in the past five years, according to CalFire. The Camp Fire, the state’s largest that destroyed the city of Paradise in fall 2018, burned 18,800 structures and killed 85 people.

And, regardless of where you live, all Californians will carry the financial burden from natural disasters with higher premiums.


Some homeowners who cannot afford their insurance premiums or had their policies not renewed have bought coverage from the FAIR (Fair Access to Insurance Requirement) plan, an insurer of last resort in California. Insurers operating in the state and policyholders fund the program.

But even the FAIR plan faces financial troubles. With more homeowners opting for the FAIR plan, largely out of necessity, the program has a potential loss of $311 billion, a dramatic increase from $50 billion five years ago.

FAIR Plan Association president Victoria Roach recently told lawmakers that the plan only has about $200 million available to cover a catastrophe, further creating uncertainty for the state’s insurance industry. 

“We grew another $10 billion in exposure in January and another $15 billion in February,” she said. “So the numbers just continue to climb, which is a concern. As those numbers climb, our financial stability comes more in question and we come closer to an assessment of the market should we, knock on wood, have a catastrophe.”

California Insurance Commissioner Ricardo Lara recently announced a far-reaching plan to revamp the state’s troubled insurance system, including having more homeowners leave the FAIR plan. The plan could help insurance companies but lead to higher premiums for homeowners.

Los Angeles County may have the most residents in the U.S., but the county lost the most residents in 2023. ADOBE STOCK

More Californians trading the Golden State for the Sunshine and Lone Star states

Californians are leaving the state, amid declining affordability and higher home prices during the past few years.

Four of the 10 fastest-shrinking counties nationwide are in California, including 119,000 in Los Angeles County, easily the largest drop. Orange, San Diego and Santa Clara counties also made the closely watched U.S. Census Bureau report.

Now, California continues to boast four of the 10-largest counties – Los Angeles, San Diego Orange and Riverside – but those numbers continue to dip lower as more residents seek affordable housing and new opportunities in other states, including Texas, Arizona, Nevada, Utah and Florida.

Two of the three fastest-growing counties – Polk and Pasco – are in Florida, followed by second-place Montgomery County in Texas.