Thin margins put more pressure on leveraged flippers
Home flippers in the United States faced their leanest returns since the financial crisis, as ATTOM’s latest data showed gross profit margins slipping below 25% for the first time since 2008.
Typical return on investment from a flip in the third quarter stood at 23.1%, even as prices and competition stayed intense.
A total of 72,217 single‑family homes and condos were flipped between July and September, making up 6.8% of all home sales, down both quarter over quarter and year over year.
Investors on a typical deal bought at a median $260,000 and sold at $320,000, generating a $60,000 gross profit before rehab and holding costs.
“Rising home prices and shrinking margins have made flipping increasingly challenging,” said Rob Barber, CEO of ATTOM.
“What was once a flipping market that consistently delivered 40–60% returns for more than a decade beginning in 2009 has now settled into five straight quarters of returns in the 20% range. Investors must choose their markets more carefully as the game has fundamentally changed.”
Southern metros lead, Texas margins lag
Flip rates and returns diverged sharply across markets. Southern metros such as Columbus, Georgia, Tuscaloosa, Alabama, Spartanburg, South Carolina and Atlanta posted some of the highest shares of flips as a portion of total sales.
At the same time, several large Texas markets, including Austin, Dallas, Houston and San Antonio, recorded single‑digit typical profit margins, according to ATTOM’s report.
Earlier this year, typical gross return on a flip fell to 25.1% in the second quarter, down from 62.9% in 2012 and the lowest margin since 2008 at that time.
“We’re seeing very low profit margins from home flipping because of the historically high cost of homes,” Barber said in that earlier analysis.
Investors pivot on strategy as holding times adjust
ATTOM’s methodology counted any arm’s‑length purchase and resale within 12 months as a flip, excluding rehab and carrying costs from its gross profit figures.
Those expenses, veteran flippers estimated, typically ran between 20% and 33% of after‑repair value, meaning many recent deals likely produced much thinner net gains than headline numbers suggested.
The trend of shrinking spreads has already pushed some experienced operators toward new‑build projects and smaller, niche markets.
With returns now back at crisis‑era levels, the report underlines a tougher reality for highly leveraged flippers and a renewed premium on disciplined acquisition, realistic budgets and exit strategies that work even when the market does not.
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