Flipping Rate Follows Usual Springtime Downward Track While Profits Keep Moving Slowly Higher; Investment Returns Still Hovering Around Modest 30 Percent Level Nationwide; Typical Raw Flipping Profit Rises Close to $75,000
IRVINE, Calif., Sept. 19, 2024 /PRNewswire/ — ATTOM, a leading curator of land, property data, and real estate analytics, today released its second-quarter 2024 U.S. Home Flipping Report showing that 79,540 single-family homes and condominiums in the United States were flipped in the second quarter. Those transactions represented 7.5 percent, or one of every 13 home sales, nationwide during the months running from April through June of 2024.
The latest portion of flipped properties was down from 8.7 percent of all sales in the U.S. during the first quarter of 2024 – a common pattern during the busy annual Springtime buying season each year when other types of home sales spike. The flipping rate also was down slightly from 7.9 percent a year earlier.
While the rate declined, fortunes kept ticking upward for investors who buy, renovate and quickly resell homes. The latest data showed that investors typically earned a 30.4 percent profit nationwide before expenses on homes sold during the second quarter of this year, marking the fourth time in five quarters that margins increased following a six-year period of nearly continuous drop-offs.
The typical profit margin on homes flipped during the second quarter of 2024 – 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, revealing anew the struggles home flippers are having in turning healthy profits.
But the return on investment was up slightly from both the first quarter of 2024 and from a low point over the past decade of about 25 percent in the first quarter of last year.
Gross profits on typical flips around the country, meanwhile, increased to about $73,500. That remained down from a high of almost $81,000 reached in 2022, but up from $70,000 in the first quarter of 2024 and more than $12,000 above last year’s low point.
“The Spring home-buying season of 2024 brought another sign of hope for home flippers that the rebound in fortunes that began for them last year was more than just a temporary thing,” said Rob Barber, CEO for ATTOM. “It’s not as if profits have shot through the roof and investors are riding a new wave of good times. 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.”
He added that “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.”
The small changes in flipping activity and profit margins during the second quarter came during yet another period of mixed patterns for the home-flipping industry compared to the U.S. housing market.
Overall, home prices rebounded strongly during the second quarter from a varied period of gains and losses during the prior 12-month period. Median prices for all single-family homes and condos nationwide rose 9 percent quarterly and 6 percent annually.
But home-flipping resale prices rose far less, with the median inching up only 2 percent quarterly and annually to $315,000. Nevertheless, that was enough to boost flipping profit margins as investors benefitted, in small increments, from shifts in prices going in their favor between the time of purchase to resale. Those gaps led to the quarterly and yearly improvement in investment returns.
The latest gains for home flippers extended their recovery from an unusual pattern of timing the housing market poorly, which resulted in their profits dropping from 2016 through 2022 while returns for other sellers soared.
Home-flipping rates dip downward in most of U.S.
Home flips as a portion of all home sales decreased from the first quarter of 2024 to the second quarter of 2024 in 159 of the 185 metropolitan statistical areas around the U.S. with enough data to analyze (85.9 percent). They went down annually in 115, or 62.2 percent, of those markets. Measured against the same peak buying period of 2023, most flipping rates declined less than one percentage point. (Metro areas were included if they had a population of 200,000 or more and at least 50 home flips in the second quarter of 2024).
Among the metro areas analyzed, the largest flipping rates during the second quarter of 2024 were in Warner Robins, GA (flips comprised 20.7 percent of all home sales); Macon, GA (15.4 percent); Atlanta, GA (13.4 percent); Columbus, GA (13.2 percent) and Memphis, TN (12.8 percent).
Q2 2024 U.S. Home Flipping Historical Trends
Aside from Atlanta and Memphis, the highest second-quarter flipping rates among metro areas with a population of more than 1 million were in Birmingham, AL (11.7 percent); Cleveland, OH (11 percent) and Columbus, OH (10.7 percent).
The smallest home-flipping rates were in Hilo, HI (3.3 percent); Honolulu, HI (3.5 percent); Seattle, WA (4 percent); San Jose, CA (4.1 percent) and Portland, OR (4.2 percent).
Typical home-flipping returns up year over year in slightly more than half of U.S.
The median $315,000 resale price of homes flipped nationwide in the second quarter of 2024 generated a gross profit of $73,492 above the median investor purchase price of $241,508. That resulted in a typical 30.4 percent gross profit margin before expenses in the second quarter of 2024, up about one point from 29.2 percent in the first quarter of 2024 and up from 27.8 percent in the second quarter of last year. But the latest nationwide figure still remained far beneath the 56.3 percent level in mid-2016 and from a more recent peak of 48.8 percent in 2020. .
Profit margins increased from the first to the second quarter of this year in 93 of the 185 metro areas analyzed (50.3 percent) and were up annually in 107 of those markets (57.8 percent).
Metro areas with the biggest year-over-year increases in typical profit margins during the second quarter were Akron, OH (ROI up from 30.9 percent in the second quarter of 2023 to 78.1 percent in the second quarter of 2024); Cape Coral–Fort Myers, FL (up from 13.8 percent to 56.4 percent); Springfield, IL (up from 34.5 percent to 75 percent); Gainesville, FL (up from 30.2 percent to 65.3 percent) and Spokane, WA (up from 28.6 percent to 61.4 percent).
The biggest annual increases in typical profit margins among metro areas with a population of at least 1 million came in Buffalo, NY (ROI up from 66.7 percent in the second quarter of 2023 to 95.7 percent in the second quarter of 2024); Cleveland, OH (up from 40 percent to 66.7 percent); Memphis, TN (up from 52.6 percent to 73.5 percent); Tulsa, OK (up from 39.7 percent to 59.2 percent) and Cincinnati, OH (up from 40.6 percent to 58 percent).
The recent gains resulted in typical gross profit margins of at least 30 percent in 105, or almost six of every 10 metros with enough data to analyze in the second quarter of 2024. That was exactly the same number as a year earlier. Typical profit margins surpassed 50 percent in the second quarter of this year in only one-third of the areas reviewed.
Q2 2024 Home Flipping Profit Trends Historical Chart
Highest raw profits remain in higher-end markets across West, South and Northeast
The largest raw profits on median-priced home flips in the second quarter of 2024, measured in dollars, were concentrated in areas of the West, South and Northeast regions where resale prices mostly topped $400,000. Nine of the top 10 fell into that category, led by San Jose, CA (typical gross profit of $350,000 on a median resale value of $1.7 million); San Diego, CA ($211,000 profit on a median resale value of $925,000); Hilo, HI ($191,650 profit on a median resale value of $521,400); New York, NY ($190,000 profit on a median resale value of $600,000) and Boston, MA ($189,000 profit on a median resale value of $649,000).
The South also continued to dominate the opposite end of the range, with 17 of the 20 worst raw profits on median-priced transactions during the second quarter. Most came in areas with median resale prices below $300,000. The weakest numbers were in Naples, FL ($12,500 loss on a median resale value of $650,000); Tyler, TX (7,262 loss on a median resale value of $274,908); Warner Robins, GA (5,316 profit on a median resale value of $263,316); Lubbock, TX ($5,584 profit on a median resale value of $211,066) and Killeen, TX ($6,013 profit on a median resale value of $226,696).
Two-thirds of home flips again financed with all cash
Nationwide, 63 percent of homes flipped in the second quarter of 2024 had been purchased by investors with cash only. That was virtually the same as the 62.6 percent level in the first quarter of 2024, although up from 60.4 percent portion in the second quarter of 2023. Meanwhile, 37 percent of homes flipped in the second quarter of 2024 had been bought with financing. That was down slightly from 37.4 percent in the prior quarter, but still up from 39.6 percent a year earlier.
Among metropolitan areas with a population of 1 million or more and sufficient data to analyze, those with the highest percentage of homes flipped in the second quarter of 2024 that had been purchased with cash included Buffalo, NY (80.5 percent); Pittsburgh, PA (76.9 percent); Cleveland, OH (75.6 percent); Birmingham, AL (74.3 percent) and Rochester, NY (74.1 percent).
Average time to flip nationwide holds steady quarterly but remains down annually
The average time it took from purchase to resale on home flips increased slightly from 164 days in the first quarter of 2024 to 166 days in the second quarter. However, the latest figure was down from 178 days in the second quarter of 2023.
Q2 2024 U.S. Avg Days to Flip Historical Chart
Investor resales to FHA buyers unchanged quarterly
Of the 79,540 U.S. homes flipped in the second quarter of 2024, 11.1 percent were sold to buyers using loans backed by the Federal Housing Administration (FHA). That was virtually the same as the 11.2 percent portion in the first quarter of 2024 although down from 11.8 percent in the second quarter of 2023.
Among metro areas with a population of 200,000 or more and at least 50 home flips in the second quarter of 2024, the highest percentages of flipped properties sold to FHA buyers — typically first-time home purchasers — were in Lakeland, FL (30.1 percent); Brownsville, TX (29.6 percent); Bakersfield, CA (25.4 percent); Fresno, CA (24.1 percent) and Vallejo, CA (23.4 percent).
One of every five counties have home-flipping rates of at least 10 percent
Home flips accounted for at least 10 percent of all home sales in 195, or 19.5 percent, of the 999 counties around the U.S. with at least 10 flips in the second quarter of 2024. That was well below the 31.5 percent of all counties with enough data to measure in the first quarter of 2024. The leaders in the second quarter of this year were Cobb County (Marietta), GA (23.1 percent flipping rate); Houston County (Warner Robins), GA (21.9 percent); Clayton County, GA (outside Atlanta) (19.6 percent); Berrien County (Nashville), GA (18.3 percent) and Jasper County, GA (outside Atlanta) (17.9 percent).
Report methodology
ATTOM analyzed sales deed data for this report. A single-family home or condo flip was any arms-length transaction that occurred in the quarter where a previous arms-length transaction on the same property had occurred within the last 12 months. The average gross flipping profit is the difference between the purchase price and the flipped price (not including rehab costs and other expenses incurred, which flipping veterans estimate typically run between 20 percent and 33 percent of the property’s after-repair value). Gross flipping return on investment was calculated by dividing the gross flipping profit by the original purchase price.
About ATTOM
ATTOM provides premium property data and analytics that power a myriad of solutions that improve transparency, innovation, digitization and efficiency in a data-driven economy. ATTOM multi-sources property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, and neighborhood data for more than 155 million U.S. residential and commercial properties covering 99 percent of the nation’s population. A rigorous data management process involving more than 20 steps validates, standardizes, and enhances the real estate data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 30TB ATTOM Data Warehouse fuels innovation in many industries including mortgage, real estate, insurance, marketing, government and more through flexible data delivery solutions that include ATTOM Cloud, bulk file licenses, property data APIs, real estate market trends, property navigator and more. Also, introducing our newest innovative solution, making property data more readily accessible and optimized for AI applications– AI-Ready Solutions.
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