What is flipping a home? It is when a person or company buys a home with the intention of selling it, fairly fast, at a profit. In 2020, 5.9% of all home sales were by people who flipped. ATTOM Data Solutions, a major real estate research firm, reports that this totaled 241,630 single-family homes and condos in the United States.
Nationally, the average profit made on a flipped home was $66,300. ATTOM defines profit as “the difference between the median sales price and the median amount originally paid by investors.” This figure represented a 40.5% return on investment. Flipped homes sold for a median price of $230,000.
The rate of flipping varies considerably from state to state, city to city, county to county and zip code to zip code. The city where people who flipped homes had the largest gross profit was San Jose at $274,000, followed by San Francisco at $171,000. This should come as no surprise. These are among the most expensive housing markets in the county.
The markets with the lowest gross profits were Raleigh at $30,000, Houston at $37,174, San Antonio at $39,867 and Las Vegas at $45,600.
A typical home flipper keeps a property for about half a year. ATTOM reports, “Home flippers who sold homes in 2020 took an average of 181 days to complete the flips, up slightly from an average of 177 days for homes flipped in 2019 and 178 days in 2018.”
24/7 Wall St. looked at the 198 metro areas covered by ATTOM research to find the one where the rate of flipping was highest last year. That market was Memphis, where the rate was 11.95% of total home sales. The gross profit on homes flipped in Memphis was $63,750, slightly below the national average.
The only other home market with a flip rate in double digits was Huntsville, where the rate was 10.79%. The gross profit for the transactions was $48,750, well below the national number.
Only two markets had flip rates of under 2% in 2020. The lowest was Portland at 1.95%. The gross margin for homes flipped in the city was $73,813. The only other one was Anchorage at 1.97%. The gross margin for the market was $57,062.
The rate of home flipping may vary nationally from year to year, but it is not by much. Going forward, home flipping will be a part of the housing market indefinitely.