House flipping had an interesting 2020. Homes being flipped were down, profits were up, but profit margins were down according to the latest report from ATTOM data solutions. (ATTOM)
- In 2020, 241,630 single-family homes and condos in the United States were flipped. This was a 13.1% drop from 2019.
- The typical flip generated a gross profit of $66,300. This was up 6.6% from 2019 and is the highest point since at least 2005.
- The typical gross flipping profit was a 40.5% ROI which was down from 41.5% in 2019.
Things are not going to get any better for house flippers anytime soon based. Not only are costs going up, but potentional buyers are dropping off by the day.
- As The Wall Street Journal reported on Wednesday, commodity prices have skyrocketed. This not only increases the cost of building a home, but it also increases the cost of renovating one. (WSJ)
- A study by the National Association of Home Builders found that a $1,000 increase in the U.S. median new home price of $346,757 would push 153,967 households out of the market. (NAHB)
One of the biggest signs of the insanity before the crash in 2008 was people flipping houses and making obscene profits with very little work. A cooling down moment for house flippers is not something that anyone is gonna think is a bad thing.