Home Flips Up; Profit Margin Drops

The second quarter of 2021 saw an uptick in house flips, but a continued trend of profit margin decrease for flippers.

Nearly 5% of all home sales last quarter were flips, representing  79,733 sold single-family homes and condominiums, according to ATTOM’s second quarter 2021 U.S. Home Flipping Report. This is an increase of 1.4% from the first quarter, when flips only represented 3.5% of all sales. However, year over year, flips are still down, in the second quarter of 2020, flips represented 6.8% of all sales. The lower level of flips is most likely due to a smaller supply of inventory and a competitive market.

Additionally, flippers’ profits have dropped again, this time hitting a 10-year low. The gross profit on a home last quarter was $67,000, which was an increase from the first quarter by 2.4% and an increase year over year by 3.1%. However, the return on investment for flippers sunk lower, representing a 33.5% ROI, compared to 37.2% in the first quarter and 40.6% in the second quarter of 2020. This is the lowest ROI since the first quarter of 2011. Regardless of a lower ROI, home flipping is up in 79% of markets.

Flippers are also moving quickly, flipping homes in the fastest time in nearly a decade. On average, flippers took 147 days to flip, compared to 156 days the prior quarter and 183 days a year ago. Cash offers by flippers remained consistent, at 59.2%. However, in Pittsburgh, 81.3% of flipped homes were purchased with just cash.

Flippers in commonwealth cities were very successful though. In Pittsburgh, flippers saw 154.2% ROI, while in Philadelphia, flippers saw a 100% ROI.