A new report shows that 241,630 single family homes and condos in the U.S. were flipped in 2020, down 13.1 percent from 2019 to the lowest point since 2016. The 2020 U.S. Home Flipping Report from ATTOM Data Solutions, shows that 5.9 percent of all home sales last year were flips.
The declines in the number of homes flipped in 2020, as well as the portion of home sellers represented by investors, marked the first time since 2014 that both measures decreased annually.
“Last year was a banner year for the U.S. housing market, with the apparent exception of the home-flipping business, which saw its fortunes slide a bit more in 2020,” said Todd Teta, chief product officer at ATTOM Data Solutions. “Home flippers did still make a nice profit on investments that generally take around six months to turn around – just not as much as they did in the previous few years.”
While flipping activity declined, gross profits and profit margins shifted in opposite directions. Profits rose in 2020, but profit margins dipped – the third straight year that returns on investments declined.
Homes flipped in 2020 typically generated a gross profit of $66,300 nationwide (the difference between the median sales price and the median amount originally paid by investors). That was up 6.6 percent from $62,188 in 2019 to the highest point since at least 2005.
But the typical gross flipping profit of $66,300 translated into just a 40.5 percent return on investment compared to the original acquisition price. The latest ROI (before accounting for mortgage interest, property taxes, renovation expenses and other holding costs) was down from 41.5 percent in 2019 and from 46.4 percent in 2018.