House flipping has become increasingly popular over the last few years. In 2017, just 5.7% of all home sales were flips. By the first quarter of 2020, that share jumped to 7.5%. However, it appears that the pace slowed by the end of 2020, shrinking to 5.9%.
The popularity of flipping shows such as HGTV's Fixer Upper and Flip or Flop probably has something to do with it. Growing interest from millennials doesn't hurt, either.
Are you thinking about getting into the fix-and-flip game? Just want guidance on where to do your next flip? Here are more essential flipping stats to have on your radar for 2021.
Nationwide stats: ROIs, flipping rates, and more
Nationally, flipping activity was on the rise in 2020. The first quarter of 2020 marked the highest level of home flips since early 2006 and a nearly two-percentage-point jump over the last three years.
House flips as a percentage of all home sales
House flipping has been rising in popularity -- but how popular is it? The United States usually sees between 5 and 6 million homes sold per year. Here's how many of them are flips:
Popular as it is, house flipping started becoming less profitable. In fact, 2019 marked the lowest average home-flipping return since 2011. In the first quarter of 2020, returns dropped in 54% of all U.S. markets, with the average flip bringing in just over $62,000.
House flipping gross profit and ROI
House flipping is on the rise, and profits show they're following the upward trend. The slight decrease in ROI between 2019 and 2020 is minimal compared to the stark declines seen in 2017 through the present. The typical house flipping return has declined for the third straight year due to median resale prices rising more slowly in 2020 than when investors were buying properties.
Financed flips have fallen over the past couple of years, too. It seems more investors are opting to buy their homes with cash -- likely due to the increased competition many markets are seeing. Cash offers are typically preferred by sellers, particularly banks and lenders with distressed properties to sell. The following data bears this out:
Share of flips purchased with financing:
- 2020: 41.7%
- 2019: 42.3%
- 2018: 41.8%
- 2017: 42.9%
Share of flips purchased with all cash:
- 2020: 58.3%
- 2019: 57.7%
- 2018: 58.2%
- 2017: 57.1%
Home-flipping returns by state
Pennsylvania came in with the most significant gross return on investment (ROI) in 2020. The average fix-and-flip investor there received 92.6% ROI. Idaho investors had it the worst, with a mere 15.6% ROI for the same time. Investors in Arizona, Nevada, Montana, Alaska, Texas, Wyoming, and Hawaii didn't reap many rewards either; all states had average ROIs under 25%.
| State | Gross profit, 2020 | Gross profit, 2019 | ROI, 2020 | ROI, 2019 |
|---|---|---|---|---|
| Alabama | $51,226 | $49,238 | 58.6% | 62.6% |
| Arizona | $48,225 | $37,400 | 21.1% | 17.6% |
| Arkansas | $49,077 | $55,000 | 52.5% | 68.8% |
| California | $105,000 | $95,000 | 27.8% | 27.1% |
| Colorado | $68,000 | $63,200 | 21.5% | 22.4% |
| Connecticut | $115,000 | $90,000 | 82.1% | 66.7% |
| Delaware | $90,500 | $92,565 | 73.2% | 81.5% |
| District of Columbia | $225,000 | $201,520 | 63.4% | 57.9% |
| Florida | $66,000 | $59,000 | 40.2% | 39.6% |
| Georgia | $51,000 | $46,400 | 35.2% | 34.1% |
| Hawaii | $88,750 | $95,000 | 19.9% | 23.2% |
| Idaho | $39,626 | $33,000 | 15.6% | 15.2% |
| Illinois | $82,500 | $74,900 | 75% | 68.7% |
| Indiana | $62,890 | $63,438 | 62.9% | 74.6% |
| Iowa | $53,750 | $47,500 | 51.2% | 47.5% |
| Kansas | $41,770 | $45,308 | 19.7% | 25.3% |
| Kentucky | $67,500 | $57,300 | 73% | 60.2% |
| Louisiana | $69,950 | $68,315 | 70% | 74.3% |
| Maryland | $114,000 | $107,000 | 68.7% | 69% |
| Massachusetts | $110,000 | $109,000 | 45.8% | 47.4% |
| Michigan | $60,350 | $52,500 | 71.8% | 70% |
| Minnesota | $65,000 | $59,500 | 34.2% | 35.4% |
| Mississippi | $37,769 | $58,533 | 24.9% | 41.9% |
| Missouri | $55,000 | $48,000 | 47.8% | 44.9% |
| Montana | $61,316 | $44,375 | 24.7% | 18.1% |
| Nebraska | $55,000 | $50,000 | 44.7% | 45.5% |
| Nevada | $50,000 | $39,500 | 21.3% | 17.1% |
| New Hampshire | $70,000 | $77,933 | 31.8% | 39.8% |
| New Jersey | $125,000 | $110,000 | 76.2% | 73.3% |
| New Mexico | $43,442 | $40,000 | 23.5% | 22.9% |
| New York | $131,000 | $110,000 | 62.4% | 57.9% |
| North Carolina | $50,750 | $46,000 | 32.7% | 31.9% |
| Ohio | $65,900 | $57,000 | 86.1% | 79.2% |
| Oklahoma | $58,250 | $52,000 | 64.7% | 62.7% |
| Oregon | $75,000 | $67,000 | 27.9% | 27.9% |
| Pennsylvania | $87,950 | $84,900 | 92.6% | 99.9% |
| Rhode Island | $107,000 | $84,500 | 64.8% | 53.5% |
| South Carolina | $61,445 | $60,300 | 53.2% | 58.7% |
| Tennessee | $70,000 | $63,100 | 70% | 66.4% |
| Texas | $39,875 | $33,622 | 21.6% | 19% |
| Utah | $72,994 | $65,313 | 26.5% | 26.8% |
| Virginia | $97,000 | $97,000 | 63.4% | 69.8% |
| Washington | $109,900 | $105,000 | 42.3% | 46.7% |
| West Virginia | $62,400 | $55,000 | 69.3% | 64.7% |
| Wisconsin | $56,825 | $49,500 | 50.3% | 47.1% |
| Wyoming | $48,448 | $54,525 | 22.4% | 30.4% |
Data source: ATTOM Data (2021).
The best and worst markets for house flipping
If you're looking for the best place to make your next fix-and-flip investment, markets in Ohio and Pennsylvania are the best spots to consider. The two states claimed five of the top 10 sites in terms of ROI at the start of this year, according to ATTOM Data. The methodology behind the choices takes heavily under consideration the return on investment for 2020, in addition to factoring in percent change in gross ROI.
Best:
- Scranton-Wilkes-Barre-Hazelton, Pennsylvania: 2020 ROI 135.8%; gross returns down 3%.
- Pittsburgh, Pennsylvania: 128.1% ROI; returns down 4%.
- Hickory-Lenoir-Morganton, North Carolina: 124.6% ROI; returns up 64%.
- Macon, Georgia: 115.7% ROI; returns up 188%.
- Philadelphia-Camden-Wilmington, PA-NJ-DE-MD: 107.2% ROI; returns up 7%.
- Davenport-Moline-Rock Island, IA-IL: 106.2% ROI; returns up 32%.
- Reading, Pennsylvania: 105.3% ROI; returns up 16%.
- Norwich-New London, Connecticut: 99.2% ROI; returns up 7%.
- Cleveland-Elyria, Ohio: 98.5% ROI; returns down 9%.
- Spartanburg, South Carolina: 94.6% ROI; returns up 20%.
Worst:
- Laredo, Texas: 2020 ROI -4.9%; gross returns down 145%.
- Santa Maria-Santa Barbara, California: 1.6% ROI; returns down 91%.
- Gulfport-Biloxi-Pascagoula, Mississippi: 12.9% ROI; returns down 57%.
- Greeley, Colorado: 13.3% ROI, returns down 56%.
- Raleigh, North Carolina: 13.6% ROI; returns up 25%.
- Boulder, Colorado: 14.3% ROI; returns down 6%.
- Amarillo, Texas: 16.5% ROI; returns down 38%.
- Fort Collins, Colorado: 18.7% ROI; returns down 3%.
- Las Vegas-Henderson-Paradise, Nevada: 19.5% ROI, returns up 32%.
- Lubbock, Texas: 20.1% ROI, returns down 25%.
The bottom line
Statistics aren't everything, but they can give you a good idea of what sort of competition you'll face and what markets to focus your investing efforts in. You should also use them to set expectations for your next flip and guide you when making an offer.
If a market offers typically low ROIs, you'll need to work even harder to secure a low price point to get returns. Estimating your rehab costs accurately will be even more critical, too.
