The home-flipping business did not appear to enjoy the same booming housing market last year that other segments of the real estate industry did. The ATTOM Data Solutions’ 2020 U.S. Home Flipping Report shows that 241,630 homes were flipped last year, down 13.1 percent from 2019 to the lowest point since 2016.
The number of homes flipped in 2020 represented 5.9 percent of all U.S. home sales that year, down from 6.3 percent in 2019. Last year was the first time since 2014 that both the number of homes flipped and the portion of home sellers represented by investors decreased.
While house-flipping gross profits rose by 6.6 percent from 2019 to 2020, profit margins did not. Return on investment (ROI) dropped from 41.5 percent in 2019 to 40.5 percent in 2020, marking the third straight year that ROI declined.
“Last year was a banner year for the U.S. housing market, with the apparent exception of the home-flipping business, which saw its fortunes slide a bit more in 2020,” ATTOM Data Solutions Chief Product Officer Todd Teta said in a release. “It’s too early to know if that small slide was a sign of weakness in the broader housing market or just a bump in the road.”
Metro areas in the South and West saw some of the largest drops in home-flipping rates in 2020. San Antonio, Texas, saw its rate drop 27.3 percent from 2019. Other cities with large rate drops include Tuscaloosa, Ala., (down 25.7 percent); Santa Rosa, Calif., (down 24.8 percent); Brownsville, Texas, (down 24.1 percent); and Houston, Texas, (down 22 percent).
Home-flipping rates did increase from 2019 to 2020 in some metro areas including Norwich, Conn., (up 38.2 percent); Hartford, Conn., (up 31.1 percent); Boulder, Colo., (up 29 percent); Albuquerque, N.M., (up 26.9 percent); and Anchorage, Alaska, (up 26.2 percent).
More flipped homes were all-cash purchases in 2020 (58.3 percent) than in 2019 (57.7 percent) or 2018 (58.2 percent), according to the report. Home flippers took an average of 181 days to complete the flips in 2020, up from 177 days in 2019 and 178 days in 2018.