The first-quarter 2020 U.S. Home Flipping Report from ATTOM Data Solutions shows that 53,705 single-family homes and condominiums in the U.S. were flipped in the Q1, representing 7.5% of all home sales in the nation during the quarter, up from 6.3% in the fourth quarter of 2019 and from 7.3% in the first quarter of last year, to the highest level since the second quarter of 2006.
The gross profit on the typical home flip nationwide (the difference between the median sales price and the median paid by investors) also increased in the first quarter of 2020, to $62,300, up slightly from $62,000 in the fourth quarter of 2019 and from $60,675 in the first quarter of last year.
But with home prices rising, the typical gross flipping profit of $62,300 translated into only a 36.7% return-on-investment compared to the original acquisition price, down from a 39.5% gross flipping ROI in the fourth quarter of 2019 and 40.9% a year earlier. The latest profit margin sits at the lowest level for home flipping since the third quarter of 2011.
“Home flipping has gradually taken up a larger portion of the housing market over the last couple of years. But profits are down and are lower than they’ve been since the dark days following the Great Recession, which is a sign that investors aren’t keeping up with price increases in the broader market,” said Todd Teta, chief product officer at ATTOM Data Solutions. “Enter now the Coronavirus pandemic and the prospects for home flipping are notably uncertain, at least in the short term. We should know a lot more in a few months about whether home prices drop and investors get hit hard, or whether they can increase their profit margins.”
Homes flipped in the first quarter of 2020 were sold for a median price of $232,000, with a gross flipping profit of $62,300 above the median purchase price of $169,700. That gross-profit figure was up from $62,000 in the fourth quarter of 2019 and from $60,675 in the first quarter of last year. But with purchase prices on investment properties continuing to rise faster than resale values, the 36.7 percent return on median sales prices versus purchase prices in the first quarter of 2020 was down from 39.5 percent in the fourth of 2019 and 40.9 percent in the first quarter of last year. The latest ROI sits at the lowest point since the third quarter of 2011, when the typical home flip netted a 35.9 percent profit margin.
for more information on ATTOM’s Q1 2020 U.S. Home Flipping Report.