Home Flippers Return to Market as Resale Prices Rise

Gross profits on homes flipped in the first quarter of 2024 rose for the third time in 12 months, but are still below peaks reached in 2016, a new report from ATTOM reveals.

“Home flippers typically earned a 30.2% gross profit nationwide before expenses on homes sold during the first quarter,” according to ATTOM’s Home Flipping Report. “Gross profits on typical flips around the country increased to $72,375. That remained down from a high of about $80,000 reached in 2022. But it was up from $65,000 in the fourth quarter of 2023 and was about $10,000 above last year’s low point.”

The report, however, suggested a cautious view of actual profit. The typical profit margin, it warned, “stayed within a range that could easily be wiped out by carrying costs that include renovation expenses, mortgage payments, and property taxes.”

The 67,817 single-family homes and condominiums flipped in the quarter accounted for 8.7% — or one in every 12 – of all home sales nationwide. That share was higher than the 7.7% recorded in 4Q 2023 but less than the 9.8% of 1Q 2023. “The typical resale price on flipped homes increased to $312,375, a 4.1% improvement over the fourth quarter of 2023,” the report noted. This compared to a median investor purchase price of $240,000.

The greatest spikes in year-over-year profit margins in 1Q 2024 were seen in Reading, PA (ROI up from 56.7% to 124.9%), Trenton, NH (ROI up from 22.7% to 64.2%), Harrisburg, PA (ROI up from 73.6% to 113.6%), Lynchburg, VA (ROI up from 49% to 87.5%), and Columbus, GA (ROI up from 41.8% to 80.1%).

Markets with the largest ROI for typical home flips completed in the first quarter were concentrated in lower-priced areas of the Northeast, led by Buffalo, NY, and four Pennsylvania cities: Reading, Pittsburgh, Scranton, and Harrisburg. In these towns, ROI ranged from 127.8% to 113.6%.

Cities in Southern states had the highest flipping rates in 1Q 2024. Three in Georgia – Warner Robins, Macon and Atlanta – were among the leaders, along with Fayetteville, NC, and Memphis, TN. Cities with populations exceeding one million that also had high rates were Columbus, OH, Birmingham, and Kansas City, MO.

Cities with the fewest flips were Honolulu, Oxnard, Naples, Des Moines and Seattle.

“Nationwide,” the report stated, “63.8% of homes flipped in 1Q 2024 had been purchased by investors with cash.” Financing was used to buy 36.2% of homes flipped in the period. The share of cash purchases was highest in Buffalo, Detroit, Cleveland, OH, Birmingham and Pittsburgh. Federal Housing Administration loans were used to buy 11.2% of homes flipped – the second quarterly increase.

Home flipping also appeared to be more widespread. It accounted for at least 10% of all home sales in 31.5% of 902 counties in the U.S., well above the 22.7% of all counties recorded in the same period of 2023. Four counties in Georgia and one in Tennessee led the pack.

“The latest numbers show that investors still face an uphill climb to clear significant profits after expenses,” said Rob Barber, CEO for ATTOM. “They, like others, also face tenuous times amid a housing market boom that’s cooled down over the past year. But we now have a year’s worth of a trend showing that things have started to turn around for the flipping industry, with clear signs of increasing interest flowing into the market.”