Home flips reached a 15-year high in 2021, but the gross profit margin fell to the lowest number in more than a decade.
According to ATTOM Data Solutions, 323,465 single-family homes and condos in the U.S. were flipped in 2021, an increase of 26% from 2020 and the highest number since 2006. Flips represented 5.5% of all homes sold, down from 5.8% in 2020 and 6.1% in 2019. However, flippers were not as successful financially as they have been in years past, partly thanks to soaring home prices. The report found that flippers had a gross profit of $65,000, down 3% from 2020, when it was $67,000. Flippers had about a 31% return on investment, the lowest number since 2008. In 2020, flippers saw a 41.9% ROI and 2019 flippers saw a 40% ROI. This is the biggest decrease in ROI since 2005. The report found that the homes flipped took a longer time to rise in median value compared to what flippers paid to buy the property.
With a fast-moving market, flippers are wasting no time. The average time to flip dropped to 153 days, the lowest in nine years. Comparatively, in 2020, flippers took 182 days and in 2019, they took 178 days. Additionally, the number of all-cash purchases on flipped homes rose to 61.3%, up from 59% in 2020 and 60.1% in 2019. The number of flipped properties bought with financing fell to 38.7%, compared to 41% in 2020 and 39.9% in 2019.
In Pennsylvania, Philadelphia had one of the biggest drops in flipping in 2021, decreasing 35.4% from 2020. However, flippers in both Philadelphia and Pittsburgh saw some of the biggest profit margins in the country. In Pittsburgh, the profit margin was 100.6%, while in Philadelphia, flippers saw a profit margin of 92.3%.