Cities Where People Make the Most From Home Flipping
Some home buyers do not acquire houses to live in. They buy them as investments and often hold them for only a brief period. According to new research from database management company ATTOM, 9.4% of home sales in the first quarter were done by home flippers. That is a total of 72,960 single-family houses. In some cities, this activity was highly profitable. (These are America’s most affordable housing markets.)
The first quarter’s average gain on a flipped home was 22%. This is lower than the figure in recent quarters. However, the situation has not worsened. Rob Barber, CEO of ATTOM said, “In the first quarter, profit margins showed a slight upward turn after an extended slump, while interest in flipped homes continued to rise among buyers.”
The 22% represents a gain of $56,000. The median price of a home flipped was $305,000, which is below the national number of about $400,000.
ATTOM looked at 172 metropolitan areas where more than 50 homes were flipped during the period. The metro where the most homes were flipped compared to all sales was Macon, Ga., at 16.8%. Atlanta followed this at $15.3%.
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In some cities, the margins on flipped homes were extraordinarily high. In Scranton, Pa., the margin was 121.9% as a return on investment. The figure was 109.8% in Pittsburgh and 94.9% in Flint, Mich. Among cities with populations over 1 million, the city with the highest return on investment was Philadelphia at 78.8%. Baltimore was at 69.9% and Detroit at 68.6%.
ALSO READ: America’s 25 Least Affordable Housing Markets
The cities with the best returns have one thing in common. They are cities where home prices are particularly low.
Flippers rarely take mortgages. In the first quarter, two-thirds of flippers paid cash for houses.
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