Home Flipping Increased Slightly in Q1, Average Profit Per Flip Soared to 30 Percent

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While home flipping decreased rapidly from the third quarter of 2022 to the fourth quarter of 2023, due to lack of inventory, it saw a slight rebound in the first quarter of this year, according to ATTOM’s U.S. Home Flipping Report.

And those few who are still doing flips are seeing record profits per flip, according to the report: On average, home flippers typically earned a 30.2% gross profit nationwide before expenses on homes sold during the first quarter of this year, marking the third time in four quarters that margins increased following a six-year period of mostly uninterrupted declines.

In total, 67,817 single-family homes and condominiums were flipped in the first quarter. Those transactions represented 8.7%, or one of every 12 home sales nationwide, during the months running from January through March of 2024.

That’s up from 7.7% of all home sales in the U.S. during the fourth quarter of 2023 – the second straight quarterly gain. While the portion was still down from 9.8% in the first quarter of last year.

The typical first-quarter profit margin – based on the difference between the median purchase and median resale price for home flips – remained about 25 percentage points below peaks hit in 2016. It also stayed within a range that could easily be wiped out by carrying costs that include renovation expenses, mortgage payments and property taxes, ATTOM says.

Gross profits on typical flips around the country, meanwhile, 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 latest numbers show that investors still face an uphill climb to clear significant profits after expenses,” says Rob Barber, CEO for ATTOM, in the report. “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.”

The continued improvements in profits and profit margins over the past year reflect a rejuvenated pattern of investors benefitting from shifts in prices going in their favor between the time of purchase to resale.

In the first quarter of 2024, the typical nationwide resale price on flipped homes increased to $312,375, a 4.1% improvement over the fourth quarter of 2023. The increase outpaced the 2.1% rise in median prices that recent home flippers were commonly seeing when they were buying their properties. Similar gaps appeared annually as well, leading to the quarterly and yearly improvement in investment returns.

Photo: Annie Gray

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