IRVINE, Calif. – June 11, 2020 — ATTOM Data Solutions, curator of the nation’s premier property database and first property data provider of Data-as-a-Service (DaaS), today released its first-quarter 2020 U.S. Home Flipping Report showing that 53,705 single-family homes and condominiums in the United States were flipped in the first quarter. That number represented 7.5 percent of all home sales in the nation during the quarter, up from 6.3 percent in the fourth quarter of 2019 and from 7.3 percent 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. That was 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 percent return on investment compared to the original acquisition price, down from a 39.5 percent gross flipping ROI in the fourth quarter of 2019 and 40.9 percent a year earlier. The latest profit margin sits at the lowest level for home flipping since the third quarter of 2011.
The first-quarter pattern of investors unable to fully keep pace with soaring home prices revealed a soft spot in the nation’s nine-year market boom, just as the major impact of the worldwide Coronavirus began damaging the United States economy. While it remains unclear how hard the housing market will get hit by the pandemic fallout, a drop in prices could further erode investor profits and cloud the future of the home-flipping industry.
“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.”
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