High costs and economic uncertainty erode ROI for real estate investor
High home prices and a gloomy market outlook are making it increasingly difficult for flippers to find profitable opportunities, ultimately squeezing margins across the industry.
In the first quarter of 2025, 67,394 single-family homes and condominiums were flipped nationwide – representing 8.3% of all home sales between January and March, data from ATTOM revealed. While this share is up from 7.4% in the previous quarter, it’s slightly down compared to the same period in 2024, when flips accounted for 8.7% of sales.
The total number of homes flipped also marked the lowest quarterly volume since 2018, reflecting a slowdown in buying activity.
The typical flipped home earned a 25% return on investment (before expenses) in Q1 2025, down from 28% in the previous quarter and continuing a steady decline from the 48.8% peak seen in late 2020.
Gross profits, the difference between the median purchase price and median resale price, fell to $65,000, down from $70,000 in Q4 2024. The median purchase price for flipped homes was $260,000, with resale prices averaging $325,000.
“The competitive home market means high prices, which is good for short-term investors on the selling end,” said Rob Barber, CEO at ATTOM. “But that dynamic is also making it harder to find under-priced homes to buy up and it's ultimately squeezing profit margins for the industry.
“It's tricky to balance at times when the market looks like it could take a downturn. Investors don't want to buy a property when prices are high and then see them drop before they're ready to sell.”
Read next: Housing surplus or shortage? How a rate decline could flip the market
Cash remains king for many flippers. About 62% of homes flipped in Q1 2025 were purchased with all cash, a slight dip from the prior quarter but consistent with last year. The remaining 37.8% of flips used financing.
The average time from purchase to resale on home flips ticked up to 164 days in Q1 2025, compared with 157 days the previous quarter, though this is still an improvement from 178 days seen in mid-2023.
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