Fewer investors are flipping homes, but those still active in the market are earning higher profits. Typical investment returns rose to the highest level since late 2018 for housing flips, according to ATTOM Data Solutions’ latest 2020 U.S. Home Flipping Report.
The gross profit on the typical home flip nationwide—which is reflected as the difference between the median sales price and the median paid by investors—rose to $67,902 in the second quarter. That is up from $61,900 a year prior. The increase prompted profit margins to rise, too. The typical gross flipping profit of $67,902 translated to a 41.3% return on investment compared to the original acquisition price, ATTOM reports. That marks the first year-over-year gain since the fourth quarter of 2017.
But while profits are up, flipping rates have fallen since the COVID-19 outbreak in the U.S., ATTOM reports. “Home flipping was a study in contrasts in the second quarter of 2020, as the flipping rate went one way and profits went the other,” says Todd Teta, chief product officer at ATTOM Data Solutions. “Far fewer house hunters were out in the market looking for homes, which probably cut into the pool of potential buyers that investors could tap. But at the same time, home flippers who were able to close deals did better than they had done in a year and a half. That likely flowed in large part from extremely low interest rates that enticed buyers who remained employed and were willing to house hunt within social distancing requirements.”
About 6.7% of all home sales in the second quarter were single-family homes or condos that were flipped, down from 7.5% in the prior quarter.
Countering the trend, the largest increases in the home flipping rate during the second quarter occurred in:
- Salisbury, Md. (up 45.8%)
- Fort Myers, Fla. (20.2%)
- Tallahassee, Fla. (16.8%)
- Corpus Christi, Texas (14.1%)
- Kennewick, Wash. (12.6%).
Overall, homes flipped in the second quarter were sold for a median price of $232,402, ATTOM Data reports. The largest gains in profit margins were in:
- Fort Collins, Colo. (ROI up 167%)
- Johnson City, TN (115%)
- Cedar Rapids, Iowa (100%)
- Youngstown, Ohio (92%)
- Chattanooga, Tenn. (91%)
Source: ATTOM Data Solutions
