Has home flipping lost its luster? According to the latest data, flipping activity fell a whopping 13% in 2020, hitting its lowest point since 2016. What’s worse: Overall flipping ROIs dropped, too, providing even less incentive for investors to get in and turn this trend around.
According to ATTOM Data Solutions' latest flipping report, profit margins dipped to 40.5% for the year -- down from 46.4% in 2018 and 41.5% in 2019. As Todd Teta, chief product officer at ATTOM Data Solutions, put it, “Last year was a banner year for the U.S. housing market, with the apparent exception of the home-flipping business.”
But what does the data mean moving forward? And where has flipping seen the most change? Let’s take a look.
Where flipping fell most
The biggest drops in flipping appear to have been in the South and West. According to ATTOM, these regions claimed nine out of the top 10 markets for decreases.
The markets hit hardest were the following:
- San Antonio, Texas (down 27.3% for the year)
- Tuscaloosa, Alabama (down 25.7%)
- Santa Rosa, California (down 24.8%)
- Brownsville, Texas (down 24.1%)
- Houston (down 22%)
Indianapolis, Las Vegas, and Austin, Texas, also saw notable drops in activity.
Flipping didn’t fall in every market, though, and in some areas -- like Norwich and Hartford, Connecticut, for example -- flipping actually jumped quite a bit (38.2% and 31.1%, respectively).
As far as ROIs go, here are the markets that saw the biggest declines in returns:
- Jacksonville, Florida (39.4% ROI, down from 52.2% in 2019)
- Richmond, Virgina (73.6% ROI, down from 84.4% in 2019)
- Cleveland (98.5% ROI, down from 108.2% in 2019)
- Birmingham, Alabama (58.6% ROI, down from 65% in 2019)
- Pittsburgh (128.1% ROI, down from 133.8%)
All in all, the spots with the highest flipping ROIs for the year were Pittsburgh (noted above); Philadelphia (107.2%); Cleveland (above); Buffalo, New York (93.5%); and Virginia Beach, Virginia (89.6%). Raleigh, North Carolina; Las Vegas; Houston; Denver; and Phoenix clocked in with the smallest profit margins for the year.
Not all bad news
It’s not all doom and gloom. As you can see, many of the above places still have pretty strong ROIs -- especially compared to the national average.
To top it off, actual profits -- not ROI -- are at their highest point in at least 15 years. In 2020, the average flipper made about $66,300 when selling their investment. That’s up more than $4,000 from 2019.