Profits for home flips are down even as activity rises, according to ATTOM Data’s second-quarter 2021 U.S. Home Flipping Report. ATTOM found that 79,733 single-family homes and condos in the U.S. were flipped in the second quarter—4.9% of all home sales in Q2 and the first increase in over a year.
The nationwide flipping rate increased from 3.5%, or one in every 29 home sales in the U.S., in Q2 during the first quarter. But it was still down from 6.8% YoY—below most levels reported throughout the last decade.
As the flipping rate increased, profit margins dipped to a 10-year low.
Home Flipping Rates and Returns:
– Overall, rates are up in almost 80% of local markets, with the largest in Savannah, Georgia (flips comprised 9.5% of all home sales); Fort Wayne, Indiana (9.3%); Canton, Ohio (9%); Ogden, Utah (8.9%) and Indianapolis, Indiana (8.9%).
– The smallest home-flipping rates were in San Jose, California (1.8%); Rochester, New York (1.9%); Albany, New York (2.1%); Bakersfield, California (2.1%) and Wilmington, North Carolina (2.2%).
– The median $267,000 resale price of homes flipped nationwide resulted in a gross flipping profit of $67,000, above the median investor purchase price of $200,000. That generated a 33.5% profit margin or ROI.
Profits and Losses, Regional Spotlights:
– The West, Northeast and South saw the highest raw profits on median-priced home flips
– The top 25 metro areas were San Jose, California (typical gross profit of $242,500), Fargo, North Dakota ($200,336); San Francisco, California ($182,000); Salisbury, Maryland ($159,500) and Barnstable, Massachusetts ($155,500).
– The smallest raw profits were in Gulfport, Mississippi ($12,938 loss); Corpus Christi, Texas ($1,800 profit); College Station, Texas ($2,779 profit); Longview, Texas ($14,291 profit) and Amarillo, Texas ($16,514 profit).
– Only 58 counties have a home-flipping rate of at least 10%, with the top being Truesdale County, Tennessee (22%); Lewis County (Hohenwald), Tennessee (20%); Jefferson County, Georgia (18.2%); Chester County, Tennessee (15.5%) and Morgan County, Tennessee (15.4%).
“Home flipping rebounded during the second quarter. But profits sure didn’t, as the typical home flip around the country netted the smallest return on investment in a decade,” said Todd Teta, chief product officer at ATTOM, in a statement. “However, it’s not like home flipping has become a losing proposition. A 33% profit on a short-term investment remained pretty decent, even after renovation and holding expenses. But with a few more periods like the second quarter of this year, investors may need to reframe how they look at these deals.”
To read the full report, click here.
Liz Dominguez is RISMedia’s senior online editor. Email her your real estate news ideas to email@example.com.