Margins Krimpen, Investors Careful
According to the reportThe typical gross profit on a reversed house in the first quarter was $ 65,000, a decrease of $ 70,000 in the previous quarter. This corresponded to a return on the investment of 25% (ROI) before the costs – decrease of 28% in Q4 2024 and far below 48.8% ROI that was seen at the end of 2020. The average investor paid $ 260,000 for a property and sold it through for $ 325,000.
“The competing home market means high prices, which is good for short -term investors to the sale,” said Rob Barber, CEO of Attom, in a statement. “But that dynamic also makes it more difficult to find insufficiently priced houses to buy and it is ultimately profit margins for the industry.
“It is difficult to balance when the market looks like it can cost a recession. Investors do not want to buy real estate if the prices are high and they will see them fall before they are ready to sell.”
About 62% of the reversed houses were fully purchased with cash – a slight decrease compared to the previous quarter. Financing was good for the other 38% of the purchases, which reflect a relatively stable mix year after year.
Cash transactions were most common in Rockford, Illinois; Toledo, Ohio; And Buffalo, New York, where more than 81% of the reversed houses were purchased without financing.
Regional differences in activity
Home Flips As a share in total turnover rose in 132 of 173 American metro lines analyzed, but annual comparisons tell a different story. Two -thirds (115) of these subways saw their shares of Flips year in the year fall.
The highest flipping speeds were concentrated in the south. In Macon, Georgia, Flips formed 21% of all home sales – the highest percentage of the country. Warner-Robins, Georgia, followed at 20.6%, while Atlanta booked a share of 15.9%.
Memphis, Tennessee and Akron, Ohio, have completed the top five to shares of 14.7% and 13.3% respectively.
Among larger cities with at least 1 million inhabitants, the highest flipping percentages were found in Birmingham, Alabama (12.8%); Kansas City (11.6%), Missouri; and Salt Lake City (11.1%). Honolulu, on the other hand, registered the lowest share of Flips at 4.7%, followed by New Orleans (4.9%) and Seattle (5.5%).
Profit margins in most subways
The return on Flipping fell quarterly over the quarter in almost 46% of the metro lines and YEA fell in the year in 63%.
Some markets saw drastic drops in ROI. In Spartanburg, South Carolina, the return of 160.2% in Q4 2024 fell to only 31.3% in Q1 2025. Ocala, Florida, saw the margins fall from 125% to 50.6%, while in Chattanooga, Tiennessee, they descended from 125.6%.
Large metro areas were not immune. St. Louis saw its typical ROI shrink from 49.3% to 27.3%, while in Fresno, California the figure fell from 51.3% to 37.8%. Pittsburgh – although it still has one of the highest ROIs in the country at 100.4% – saw a quarterly dip of 108.7%.
Yet some markets yielded a strong return. Buffalo, New York, led the nation with a ROI of 102.1%, closely followed by Pittsburgh and Scranton, Pennsylvania. Other well-performing subways were the Illinois cities Peoria (89.1%) and Rockford (87.7%).
Larger cities with the weakest return include Austin (1%ROI), Dallas (3.7%) and Houston (5%).
ATOM -data also show that lower acquisition costs correlate with higher flipping profits. In markets where typical houses were purchased for less than $ 225,000, the median ROI was 46.4%. This fell to 22% for houses bought between $ 225,000 and $ 400,000, and only 19% bought for houses for more than $ 400,000.
