The home flippers are returning to the market, even as their profit margins have dipped to a 10-year low.<\/p>\n\n\n\n
About 4.9% of all home sales in the second quarter were from home flipping\u2014defined as a single-family home or condo transaction that was bought and sold within 12 months. The home flipping rate is up from 3.5% in the first quarter of 2021 but still remains below levels throughout most of the last decade, according to ATTOM Data Solutions\u2019 latest 2021 U.S. Home Flipping Report.<\/p>\n\n\n\n
Profits are less for a home flip. The gross profit on a typical home flip\u2014the difference between the median sales price and the median paid by investors\u2014was $67,000 in the second quarter. That is a 33.5% return on investment compared to the original acquisition price\u2014down from 40.6% a year earlier and the lowest point since the first quarter of 2011.<\/p>\n\n\n\n
Meanwhile, the median price of homes flipped in the second quarter climbed to an all-time high of $267,000, up 18.7% from a year earlier. Those price increases, however, failed to surpass the increases that investors were absorbing when they purchased the homes they sold in the second quarter, according to the study. The gap\u2014prices rising more on a purchase than resale\u2014led to profit margins dropping, researchers note.<\/p>\n\n\n\n
\u201cHome flipping rebounded during the second quarter, but profits sure didn\u2019t,\u201d says Todd Teta, chief product officer at ATTOM. \u201cThe typical home flip around the country netted the smallest return on investment in a decade. However, it\u2019s not like home flipping has become a losing proposition. A 33 percent profit on a short-term investment remained pretty decent, even after renovation and holding expenses. But with a few more periods like the second quarter of this year, investors may need to reframe how they look at these deals.\u201d<\/p>\n\n\n\n
The largest home flipping rates in the second quarter occurred in:<\/p>\n\n\n\n