Home Flipping Activity and Profits Both Rise in Q1 2024
Investment Returns Still Low but Reach 30% Nationwide
By ATTOM Team
ATTOM, a leading curator of land, property and real estate data, released its first-quarter 2024 U.S. Home Flipping Report showing that 67,817 single-family homes and condominiums in the United States were flipped in the first quarter. Those transactions represented 8.7%, or one of every 12 home sales nationwide, during the months running from January through March of 2024.
The latest portion was up from 7.7% of all home sales in the U.S. during the fourth quarter of 2023 — the second straight quarterly gain. While the portion was still down from 9.8% in the first quarter of last year.
As flipping rates went up, fortunes kept improving for investors who buy and quickly resell homes. The latest data showed that home flippers typically earned a 30.2% gross profit nationwide before expenses on homes sold during the first quarter of this year, marking the third time in four quarters that margins increased following a six-year period of mostly uninterrupted declines.
The typical first-quarter profit margin — 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.
But it was up from both the fourth quarter of 2023 and from a low point over the past decade of about 25% in the first quarter of last year.
Gross profits on typical flips around the country, meanwhile, increased to $72,375. That remained down from a high of about $80,000 reached in 2022. But it was up from $65,000 in the fourth quarter of 2023 and was about $10,000 above last year’s low point.
“The latest numbers show that investors still face an uphill climb to clear significant profits after expenses,” said Rob Barber, CEO for ATTOM. They, like others, also face tenuous times amid a housing market boom that’s cooled down over the past year. But we now have a year’s worth of a trend showing that things have started to turn around for the flipping industry, with clear signs of increasing interest flowing into the market.”
The continued improvements in profits and profit margins over the past year reflect a rejuvenated pattern of investors benefitting from shifts in prices going in their favor between the time of purchase to resale.
In the first quarter of 2024, the typical nationwide resale price on flipped homes increased to $312,375, a 4.1% improvement over the fourth quarter of 2023. The increase outpaced the 2.1% rise in median prices that recent home flippers were commonly seeing when they were buying their properties. Similar gaps appeared annually as well, leading to the quarterly and yearly improvement in investment returns.
Home Flipping Rates Turn Upward in Almost 80% of Nation
Home flips as a portion of all home sales increased from the fourth quarter of 2023 to the first quarter of 2024 in 134 of the 173 metropolitan statistical areas around the U.S. with enough data to analyze (77.5%). Most of the declines were by less than two percentage points.
Among those metros, the largest flipping rates during the first quarter of 2024 were in:
» Warner Robins, GA (flips comprised 18.7% of all home sales)
» Macon, GA (17.1%)
» Fayetteville, NC (15.8%)
» Atlanta, GA (14.7%)
» Memphis, TN (14.6%)
Aside from Atlanta and Memphis, the highest flipping rates among metro areas with a population of more than 1 million were in:
» Columbus, OH (12.8%)
» Birmingham, AL (12.7%)
» Kansas City, MO (12.1%)
The smallest home-flipping rates among metro areas analyzed in the first quarter were in:
» Honolulu, HI (3.7%)
» Oxnard, CA (5.3%)
» Naples, FL (5.4%)
» Des Moines, IA (5.5%)
» Seattle, WA (5.5%)
