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HomeEconomyFlipping Out: Rising Home Prices Boost House-Flipper Fortunes

Flipping Out: Rising Home Prices Boost House-Flipper Fortunes

In the world of real estate, one trend’s loss is another’s gain. As US home prices soared this year, house flippers found a silver lining. Recent data from ATTOM reveals a favorable uptick for these investors: profits from house flips in the second quarter surged significantly.

To delve into the numbers, the gross profit from a standard house flip jumped to an impressive $66,500, marking an 18% leap from the $56,250 reported in the previous quarter. While this might not touch the dizzying peak of $102,063 set in 2022, it’s a clear signal of positive momentum. Translating this into ROI terms, we see a 27.5% return— a notable increase from the 22.9% in Q1, although it still trails behind the record 61%.

As Rob Barber, ATTOM’s CEO, remarked, house flippers’ fortunes are undergoing a revival. This is particularly significant given the previous odd phase where, despite a booming market, their returns faced a downturn. This resurgence aligns with the 10% surge in median prices for single-family homes during the spring buying frenzy.

A curious combination of factors has been at play here. The relentless demand, coupled with a stingy housing inventory, has catapulted residential prices throughout the year. Current homeowners, despite the mounting mortgage rates, are playing hard to get, thanks to their reluctance to let go of their attractive rates. This dynamic has not only exacerbated the supply crunch but has also presented hurdles for many aspiring middle-income homeowners.

However, it’s not all sunshine and rainbows for the flippers. Despite the growing profits, the actual flipping activity took a dip this quarter. Flips made up roughly 8% of all home sales—a decline from the 9.9% in the preceding quarter and a low not seen since 2021.

In sum, while house-flipping profits are basking in the glow of rising home prices, the volume of flipping activity showcases a contrasting narrative. It’s a gripping reminder of the ever-shifting dynamics of the real estate market, where fortunes can flip—pun intended—in the blink of an eye.

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