InvestmentsReal Estate

House flipping is back – it’s just not as profitable as it used to be

Flipping rate spikes to 9-year high, while average ROI falls to 8-year low

It seems Americans have finally shed their post-recession fears and gotten back into the house flipping game.

The latest report from ATTOM Data Solutions reveals that the house-flipping rate spiked to a nine-year high in the first quarter of the year, with 7.2% of all home sales representing a flip – up from the previous quarter’s 5.9%.

But it appears flippers are making less – way less – than they used to.

ATTOM’s report revealed that the average return on investment calculated by the cost of acquisition versus the cost of sale was 38.7% in Q1 – the lowest level in nearly eight years. This is down nearly 10 percentage points from one year ago.

Of course, there are always those who buck the trend.

In 11 markets, investors actually doubled their ROI on house flips. The standouts with the highest ROIs were Pittsburgh, Pennsylvania; Flint, Michigan; Shreveport, Louisiana; Scranton, Pennsylvania; and Knoxville, Tennessee.

The average flip sold for a median price of $215,000, ATTOM revealed, and the average gross flipping profit in Q1 was $60,000. The average timeframe to complete a flip was 180 days.

“With interest rates dropping and home price increases starting to ease, investors may be getting out while the getting is good, before the market softens further,” said Todd Teta, ATTOM’s chief product officer.

“While the home flipping rate is increasing, gross profits and ROI are starting to weaken and the number of investors that are flipping is down 11% from last year,” Teta continued. “Therefore, if investors are seeing profit margins drop, they may be acting now and selling before price increases drop even more.”

About the Author

Most Popular Articles

Housing market flashing recession signal

The housing market is signaling there will be an economic recession by the 2020 election, according to Benn Steil, director of international economics at the Council on Foreign Relations.

Oct 11, 2019 By

Latest Articles

Foreclosure activity drops to lowest level since 2005

Foreclosure activity sank in the third quarter of 2019, dropping to the lowest level in nearly 15 years, according to the latest report from ATTOM Data Solutions. Foreclosure activity in the third quarter fell 19% from a year ago to the lowest level since the second quarter of 2005, a 13-year low.

Oct 16, 2019 By