ATTOM released its second quarter 2021 U.S. Home Flipping Report showing that 79,733 single family homes and condominiums in the United States were flipped in the second quarter.
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Those transactions represented 4.9 percent of all home sales in the second quarter of 2021, or one in 20 transactions, the first increase in more than a year.
The second quarter home flipping rate was up from 3.5 percent, or one in every 29 home sales in the nation, during the first quarter of 2021. But it was still down from 6.8 percent, or one in 15 sales, in the second quarter of last year and remained below levels seen throughout most of the past decade.
The report further shows that as the flipping rate rose, profit margins dipped to a 10-year low. The gross profit on the typical home flip nationwide (the difference between the median sales price and the median paid by investors) rose in the second quarter of 2021 to $67,000. That figure was up 2.4 percent from $65,400 in the first quarter of 2021, and 3.1 percent from $65,000 in the second quarter of last year.
But the more important measure of profit margins slid downward, with the typical gross-flipping profit of $67,000 in the second quarter of 2021 translating into just a 33.5 percent return on investment compared to the original acquisition price.
The national gross-flipping ROI was down from 37.2 percent in the first quarter of 2021, and from 40.6 percent a year earlier, to its lowest point since the first quarter of 2011, when the housing market had yet to start recovering from a price slump brought on by the Great Recession in the late 2000s.
The decrease of 7.1 percentage points in the typical profit margins from the second quarter of last year to the same period this year, marked the largest annual drop since mid-2014.
Profit margins declined in the second quarter as prices on flipped homes rose more slowly than they did when investors originally bought their properties.
Specifically, the median price of homes flipped in the second quarter of 2021 soared to an all-time high of $267,000. That was up 10.6 percent from $241,400 in the first quarter of 2021 and 18.7 percent from $225,000 a year earlier. The annual increase marked the biggest price spike for flipped properties since 2005, and the quarterly gain topped all improvements since at least 2000. ■