How is Flipper doing in today’s hot market?

Recent data from ATTOM shows that the current housing market is preventing houses from overturning in various ways.

First, fewer houses are being flipped. Recent numbers, which reflect flipping activity in Q21 2021, show that total flipping volume is at its lowest level since 2000. Currently, only one flip out of 37 real estate transactions, which is about 5% from Q4 2020 and down 7.5% from the same period a year ago.

Since the reversal of homes depends so much on the macro-economic climate, it is understood that activity is declining. With rising inflation fears, uncertain interest rates and pending closures, it is difficult to predict what the real estate market will look like down the road in a few months.

But even Flipper is hitting performance for those who continue to work.

Total profits fell to $ 63,500, down nearly 11% from 71 71,000 in 2020 Q4. Profit margins also fell to 37.8% from 41.8% in the previous quarter.

Why is the margin decreasing?

The decline in margins is probably due to three reasons:

  1. The almost universal rise in property prices in every region and type of property is making it even more challenging to buy cheap property for flippers.
  2. With extremely low inventory, there is more competition for “fixer uppers” from regular home buyers. It turns out that more traditional tenant home buyers are willing to take the risk and take on a property rehabilitation job if that means they can actually put it under some contract.
  3. The prices of materials and labor are rising, which will push down margins.

That said, any complete flip would be listed in a very convenient environment and could bring a premium price.

With inventory tick-ups starting in May and timber prices falling by more than 40% from their maximum, it will be interesting to see if there is flipping activity and profit recovery in Q2.

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