Despite how hot the housing market is right now, one area of housing isn’t quite as popular these days: home flipping.
A new report from ATTOM Data Solutions shows that there were 57,155 single-family homes and condos flipped during the third quarter, representing 5.1% of all home sales. That’s down from 6.7% of home sales in the second quarter.
That decline is in spite of the fact that it’s never been more profitable to flip a house. According to ATTOM’s data, the gross profit on the typical home flip nationwide – the difference between the median sales price and the median paid by investors – rose to $73,766 in the third quarter.
Flipping a house hasn’t been that profitable since at least 2000.
For comparison, a home flip in the second quarter resulted in a profit of $69,000, while a flip in the third quarter of last year led to a profit of $61,800.
“The continuation of opposing trends, with flipping rates down but profits up, reflected broader national housing market patterns as the worldwide Coronavirus continued spreading across the United States,” ATTOM said in its report.
“Home prices kept soaring throughout most of the country in the third quarter as buyers – often seeking larger or more wide-open spaces - chased a dwindling supply of homes for sale,” the housing data provider continued. “Rising values continued pushing a nine-year boom in the housing market even as much of the economy struggled to overcome high unemployment and other damage from the pandemic.”
The large housing markets where flipping made the most money were Austin, Texas (where home flipping profit margins increased by 176.4% over last year), Raleigh, North Carolina (return on investment up 74%); Phoenix (up 69.8%); Kansas City, Missouri (up 55.9%) and Las Vegas (up 54.4%).
Meanwhile, the markets that saw the highest flipping returns in dollar amount were mostly located in the western part of the U.S. In fact, four of the top five were all in California.
According to ATTOM’s data, the market that saw the highest return on investment was San Jose, California, where a typical home flip resulted in a profit of $290,000. Trailing San Jose in the top five was Ventura, CA (profit of $180,000); Bridgeport, Connecticut (profit of $177,500); Los Angeles (profit of $161,500); and San Francisco (profit of $158,500).
Note: ATTOM defines a home flip as any arms-length transaction that occurred in the quarter where a previous arms-length transaction on the same property occurred within the last 12 months. ATTOM also considers the home flipping profit to be the difference between the purchase price and the flipped price and does not include rehab costs and other expenses.