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IRVINE, Calif. — New data shows home resales fell sharply last year, marking the first annual decline since 2008.
The number of single-family homes and condominiums resold in the U.S. in 2023 was 308,922, down 29% from 436,807 in 2022, according to real estate data curator ATTOM.
And as the number of homes resold by investors declined, resales' share of total home sales also fell from 8.6% in 2022 to 8.1% last year, data from ATTOM's U.S. Home Resales Report released last month showed.
Profits from reselling homes fall for two-thirds of U.S. buyers
Profits and margins also fell on quick buy-renovate-resale projects, with gross profit on a typical home flip falling to $66,000 nationwide in 2023, down from $70,100 in 2022 and $75,000 in 2021.
Additionally, the latest national return on investment (ROI) was down from 28.1% in 2022 and 35.7% in 2021, making it the lowest ROI since 2007.
(File: Malkovstock / iStock / Getty Images Plus)
“2023 is an increasingly challenging environment for home flipping across the U.S.,” Atom CEO Rob Barber said in a statement. “Whether the overall market has soared in recent years or only seen modest gains, investors have missed out.”
Among metropolitan areas with populations of over 1 million, the cities with the highest gross profit margins in 2023 were Pittsburgh, Pennsylvania; Buffalo, New York; Baltimore, Maryland; Richmond, Virginia; and Philadelphia, Pennsylvania.
Meanwhile, the cities with the lowest profit margins were Austin, Dallas, San Antonio and Houston in Texas, and Salt Lake City in Utah.
Home resale rates see biggest declines in the South and West
In 112 of the 212 metropolitan statistical areas analyzed in the report, home resales as a share of total home sales decreased from 2022 to 2023.
The data shows that the largest annual resale rate declines were all in the South and West, led by Gainesville, Georgia; Phoenix and Prescott, Arizona; Charlotte, North Carolina; and Provo, Utah.
Outside of Phoenix and Charlotte, the metropolitan areas with populations of 1 million or more that will see the largest declines in resale rates from 2022 to 2023 are Las Vegas, Nevada; Sacramento, California; and Tucson, Arizona.
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“The sharp decline in home resale activity is likely due to a combination of a lack of supply of homes for sale and declining revenues,” Barber added. “Either way, a significant financial overhaul will be required to turn around the fortunes of home resale.”
In 2023, soaring home prices and rising mortgage rates stalled the average homebuyer's decision to relocate to a larger space than usual.
Related: 78% of potential homebuyers say the American Dream is unaffordable
“The impact wasn't felt immediately in 2020 and into 2022 because many Americans moved to cheaper cities. But now, as more people return to offices, more people are trying to live in Seattle, Denver, Portland and Dallas and they're struggling,” Redfin CEO Glenn Kelman explained in August. “So what we need to do is build more housing.”
The news was reported from Los Angeles.