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There’s some excellent news and a few dangerous information concerning dwelling flipping.

The excellent news is that regardless of excessive rates of interest, it’s nonetheless potential to show a revenue and make an honest dwelling flipping homes. The dangerous information is that earnings are tighter, and offers are arduous to seek out. It’s good to flip extra homes than earlier than to make the identical cash as when charges had been decrease, and gross sales costs had been on the rise. This is based on actual property knowledge and analytics website ATTOM’s First Quarter 2025 U.S. Dwelling Flipping Report.

Flips accounted for 8.3% of all dwelling gross sales from January by means of to March this 12 months, which quantities to 67,394 single-family houses and condominiums. It marked a slight enhance from the earlier quarter’s 7.4% however a drop from the identical time final 12 months when flips had been 8.7% of all noncommercial residential housing gross sales.

Revenue Margins Shrink

The most important obstacle to accommodate flippers is high-priced houses that go away little room for revenue, because it nonetheless means shopping for excessive and promoting greater in a market that has slammed on the brakes in comparison with the runaway practice that it was in 2020. In keeping with ATTOM, the standard investor paid $260,000 for a house they flipped within the first quarter of 2025, promoting it for $325,000, netting between $65,000 and $70,000, after holding and shutting prices.

ATTOM CEO Rob Barber stated:

“The aggressive dwelling market means excessive costs, which is nice for short-term buyers on the promoting finish. However that dynamic can be making it tougher to seek out underpriced houses to purchase up, and it’s finally squeezing revenue margins for the business. It’s difficult to steadiness at instances when the market seems prefer it might take a downturn. Buyers don’t wish to purchase a property when costs are excessive after which see them drop earlier than they’re able to promote.”

Two-Thirds of Main Markets Register a Flipping Downturn

ATTOM analyzed knowledge from metro areas with over 200,000 residents and a minimal of fifty dwelling flips in Q1 2025. Particular tendencies emerged, with Southern cities, notably these in Georgia and the Midwest, indicating that flipping continues to be viable, albeit on a a lot smaller scale than earlier than.

Essentially the most sturdy flipping markets had been, with the very best percentages of flips:

Macon, GA: 21% of all dwelling gross sales
Warner-Robins, GA: 20.6%
Atlanta: 15.9%
Memphis: 14.7%
Akron, OH: 13.3%

Aside from Atlanta and Memphis, metros with over 1 million residents with the very best variety of flips had been:

Birmingham, AL: 12.8%
Kansas Metropolis, MO: 11.6%
Salt Lake Metropolis: 11.1%

There have additionally been some dramatic downturns in flipping from beforehand prolific markets. The smallest proportion of flips within the largest metros had been:

Honolulu: 4.7%
New Orleans: 4.9%
Seattle: 5.5%
Pittsburgh: 5.9%
Portland, OR: 6.1%

A number of Southern cities skilled sharp declines in flipping revenue margins from quarter to quarter. These had been:

Spartanburg, SC (ROI down from 160.2% in This fall 2024 to 31.3% in Q1 2025)
Ocala, FL (down from 125% to 50.6%)
Lynchburg, VA (down from 69.2% to 31%)
Johnson Metropolis, TN (down from 82.1 to 44.5%)

In main cities with populations over 1 million, earnings had been down throughout the nation, from 51.3% to 37.8% in Fresno and 44.2% to 36.1% in New York, with cities in between, akin to Pittsburgh, Chicago, and St. Louis additionally experiencing declines. In solely 26% of the 173 areas analyzed, cities skilled revenue margins over 50%.

Nonetheless, and that is the place issues develop into attention-grabbing, some cities, akin to Pittsburgh, skilled a decline in flipping exercise however nonetheless ranked among the many prime cities for ROI on the homes that had been flipped. That’s as a result of homes within the Metal Metropolis are typically extra reasonably priced than these in the remainder of the nation, leading to a 2% decrease price of dwelling in comparison with the nationwide common. Nonetheless, the quantity of obtainable stock is low, which is why the quantity of flips has dropped.

Elsewhere, different Southern and Northern cities with populations exceeding 1 million, akin to Buffalo, New Orleans, Memphis, and Philadelphia, additionally demonstrated the best revenue margins, largely on account of their burgeoning economies.

Conversely, don’t anticipate to make huge bucks should you’re flipping homes in these Texas cities:

Austin (1% ROI)
Dallas (3.7% ROI)
Houston (5% ROI)
San Antonio (6.9% ROI)

All of them skilled explosive development after the pandemic and have since seen gross sales costs stall or fall.

The Decrease the Price, the Greater the Revenue

If you happen to don’t have a high-risk tolerance, the resounding message from ATTOM’s ROI knowledge is to steer clear of higher-end flips. Metro areas the place buyers might purchase houses for lower than $225,000 gave the most effective returns, providing a median revenue of 46.4%. When the price of a flip was between $225,000 and $400,000, the revenue margin dropped to 22%, and above $400,000, it dropped once more to 19%.

What the ATTOM knowledge didn’t present was that costlier homes, usually on account of their measurement or the higher-end finishes required, additionally had a better probability of going over funds and diminishing returns much more.

Money Is Nonetheless King

Leveraging a flip with arduous cash in an period of excessive rates of interest is all the time a dangerous proposition when patrons are sitting on the fence. Chances are you’ll be required to refinance into a standard mortgage. It’s one of the explanations that 62.2% of all houses flipped throughout the first quarter had been bought with money.

It most likely comes as no shock that less-expensive markets had been the place the very best percentages of all-cash purchases befell. These embrace:

Rockford, IL (81.6%)
Toledo, OH (81.2%)
Buffalo, NY (81.2%)
Cape Coral, FL (81.1%)
Naples, FL (81.1%)

Remaining Ideas

Solely probably the most resilient, skilled, and well-funded are flipping homes as of late. If you happen to’re not any of these issues, it’s finest to remain on the sidelines. Costly markets are a big danger until you’ve got the assets to carry on to a house in case it doesn’t promote on the worth you want it to.

Home flipping is ruled by stock and rates of interest. Though stock is growing, it nonetheless stays beneath the beneficial six-month provide for a wholesome market, indicating demand for homes.

Nonetheless, costs haven’t fallen sufficient but to entice patrons to make affords whereas rates of interest are excessive. That doesn’t imply flipping is just not potential at this time, but it surely does demand lots of sifting by means of houses in less-expensive markets to seek out one which is smart.

Such is the reticence, nevertheless, of flippers to take a danger that you probably have deep pockets, you may stand a greater probability of negotiating a low worth. In case your provide is accepted, guarantee you’ve got adequate liquidity to carry on to it within the occasion that it doesn’t promote.

Ultimately, the market will flip round. It’s only a query of when.

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