House flippers are no longer making a killing, but activity is as high as ever

Returns dropped to an eight-year lows, but activity rose to an eight-year high

National Weekend Edition /
Mar.March 08, 2020 12:00 PM
Home-flipping is at an 8 year high (Credit: iStock)

Home-flipping is at an 8 year high (Credit: iStock)

House flippers aren’t making what they used to, but it seems everyone still wants in on the market.

House flipping activity increased to an eight-year high in 2019 but returns conversely dropped to eight-year low, according to an ATTOM Data Solutions study reported by Housing Wire. ATTOM’s Todd Teta said that was because of cost of buying.

ATTOM Data Solutions’ Todd Teta

ATTOM Data Solutions’ Todd Teta

“This happened as the cost of buying properties continued to rise faster than gains on resale,” he said.

Still, flipping appeared to pay off for many investors. Homes flipped last year made a gross profit of around $62,900 — a 40.6 percent return on their investment compared to their original purchase price. In 2018, they made an average gross profit of $65,000, or a 45.8 percent return.

Competition from well-financed corporate flippers might play a role in shrinking profits. The flipping industry has become increasingly institutionalized over the last several years. As of last year, corporate sellers made up more than 40 percent of flippers.

Some have even started paying rideshare drivers referral fees for spotting potential flips in neighborhoods where rents and home prices are rapidly increasing.

Nearly 246,000 single-family homes were flipped last year using $32.5 billion in financing, a 21 percent increase from 2018, but profits for flippers dropped about 3.2 percent year over year.

Activity increased generally across the country — home flipping rates increased in 64 percent of markets year over year. In total, around 6.2 percent of all sales last year were flips. [Housingwire]Dennis Lynch


Related Articles

arrow_forward_ios
Home sales were the busiest January on record, but still the fifth month of decline in a row. (iStock)
Pending home sales fall for fifth consecutive month
Pending home sales fall for fifth consecutive month
CBRE CEO Bob Sulentic. (CBRE, Getty)
CBRE’s 2020 earnings down 8%
CBRE’s 2020 earnings down 8%
January is the second consecutive month of increase in new home sales. (Getty)
Sales of new homes up 4.3% in January
Sales of new homes up 4.3% in January
(iStock/Illustration by Alexis Manrodt for The Real Deal)
US home prices are more than 5% too high: Fitch
US home prices are more than 5% too high: Fitch
The Texas snow storm was partly responsible for the decline in mortgage applications. (Getty)
Texas storm, increasing rates freeze home mortgage market
Texas storm, increasing rates freeze home mortgage market
(iStock)
US home prices jump 10.4% in best year since 2013
US home prices jump 10.4% in best year since 2013
Realogy CEO Ryan Schneider
Realogy’s revenue hits $6.2B after housing rebound
Realogy’s revenue hits $6.2B after housing rebound
Housing inventory fell to a historic low  last month. (iStock, Andrew Wyeth via MOMA)
Home sales, prices rose in January as inventory hit new low
Home sales, prices rose in January as inventory hit new low
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...