Home Flippers See Drops in Profit

As limited inventory remains a challenge for most areas across the country, house flipping has seen a drop in both rate and profit.

According to ATTOM Data Solution’s first-quarter 2021 U.S. Home Flipping Report, only 32,526 single-family homes and condos were flipped in the first quarter of 2021, representing just 2.7% of all sales, or only one in 37 transactions. This is the lowest level of flips in 21 years. Comparatively, for the previous quarter, home flips represented 4.8% of all home sales or one in 21 sales. Year over year, that number dropped 4.8%.

Additionally, home flippers saw a drop in both profit and their profit margin. For the past quarter, the gross profit was $63,500, down from $71,000 in the previous quarter. However, it is a slight bump compared to the first quarter of 2020, where home flippers only saw a profit of $62,000. Flippers saw a return on investment of 37.8%, down from 41.8% in the fourth quarter of 2020 and also below this time last year, where flippers received 38.8% ROI. This is the lowest point in nearly a decade.

Flippers are moving quickly though. They took, on average, 159 days to complete all transactions, compared to 175 days in both the fourth and first quarters of 2020. This is the shortest range in close to eight years.

Despite rising home prices, the median home price for flipped homes also dropped. For the first quarter, the median home price of a flipped house was $231,500, a decrease of 3.9% from $241,000 in the previous quarter. However, year to year, the median home price did see a bump of nearly $10,000.

Across the U.S., home flipping dropped in 70% of local markets, with returns dropping in close to two-thirds of markets. However, Pittsburgh’s market saw a bump, with flippers’ profit margins increasing 88%. Additionally, flippers in Pittsburgh saw a 225.6% ROI, up 120% year to year.