Home flipping is defined as a “single-family home or condo transaction that was bought and sold within 12 months.” This is an appealing option for investors that can pay the high upfront cost in order to make a profit from the higher-value sale. But with the real estate market being so volatile in 2021, is it worth it?
Here is information gathered from Realtor Magazine:
“About 4.9% of all home sales in the second quarter were from home flipping… The home flipping rate is up from 3.5% in the first quarter of 2021 but still remains below levels throughout most of the last decade, according to ATTOM Data Solutions’ latest 2021 U.S. Home Flipping Report.
Profits are less for a home flip. The gross profit on a typical home flip—the difference between the median sales price and the median paid by investors—was $67,000 in the second quarter. That is a 33.5% return on investment compared to the original acquisition price—down from 40.6% a year earlier and the lowest point since the first quarter of 2011.
Meanwhile, the median price of homes flipped in the second quarter climbed to an all-time high of $267,000, up 18.7% from a year earlier. Those price increases, however, failed to surpass the increases that investors were absorbing when they purchased the homes they sold in the second quarter, according to the study. The gap—prices rising more on a purchase than resale—led to profit margins dropping, researchers note.”
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