Spring homebuying season brings another win for home flips
The spring homebuying season of 2024 has brought encouraging signs for home flippers, suggesting that the rebound in profits seen last year may be more than just a temporary improvement.
According to ATTOM’s second-quarter home flipping report, 79,540 single-family homes and condominiums were flipped during the quarter, representing 7.5% of all home sales nationwide between April and June. While this flipping rate was down from 8.7% in the first quarter and slightly below the 7.9% rate from a year ago, the financial outlook for home flippers has improved.
Investors earned an average 30.4% profit before expenses on homes sold in the second quarter, marking the fourth time in five quarters that profit margins increased after a prolonged six-year decline.
"It's not as if profits have shot through the roof and investors are riding a new wave of good times," ATTOM chief executive Rob Barber said in the report. "Far from it, as they continue to struggle to benefit from the broader market boom. But the second-quarter numbers did show another step in the right direction."
Although the typical 30.4% profit margin for home flips remained about 25 percentage points below its peak in 2016, it was still an improvement from both the first quarter of 2024 and the low point of about 25% seen in early 2023. Gross profits on typical home flips also increased to $73,492, up from $70,000 in the previous quarter and significantly higher than last year’s low of $61,000.
Barber pointed out that the current market conditions, including tight housing supply and falling interest rates, are helping to boost home flipping returns. However, he noted that challenges remain.
"With the market rising amid tight supplies of homes for sale around the country and falling interest rates, conditions appear ripe for more improvement over the rest of the year as long as prices don't shoot up past what most buyers can afford," Barber said.
The home-flipping market showed mixed results across the country in the second quarter. Home flipping rates decreased in 159 of the 185 metro areas analyzed by ATTOM, with 62.2% of markets seeing declines compared to the same period last year. In most of these areas, flipping rates fell by less than one percentage point.
Despite these declines, some metro areas still recorded high flipping activity. Warner Robins, Georgia, led the nation with home flips making up 20.7% of all home sales. Other cities with notable flipping rates included Macon, GA (15.4%), Atlanta, GA (13.4%), Columbus, GA (13.2%), and Memphis, TN (12.8%).
Read more: Fix and flips: where ROI has been strongest
While overall home prices across the US rose by 9% in the second quarter compared to the previous quarter, home flipping resale prices increased at a much slower rate, inching up just 2% to a median of $315,000. This modest rise in resale prices was enough to boost profit margins for flippers, thanks to favorable price shifts between purchase and resale.
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