Flipping Homes in Q1 2025: Profit Margins Tighten Amid Market Shifts

As the spring market unfolded in the first quarter of 2025, home flippers found themselves navigating through choppier waters. Recent data from ATTOM reveals some notable shifts:

1. Lower Volume, Lower Profits

Between January and March, around 67,400 residential properties were flipped—accounting for 8.3% of all home sales. While this is a slight uptick from Q4 2024, it marks the smallest quarterly flip total since 2018 (biggerpockets.com, mymortgagemindset.com).Median gross profit on a flip shrank from approximately $70K to $65K, reflecting a return on investment (ROI) of ~25%, down from around 28% in late 2024 and much lower than the near-49% peak during the 2020 boom .

2. Why the Squeeze?

High acquisition costs are squeezing margins as investors compete in a tight market. Holding costs and the risk of a sudden downturn are weighing on strategies .ATTOM’s CEO notes that while the current market favors sellers, it also limits opportunities for finding underpriced entry deals .

3. Regional Market Divergence

• Hotspots for flipping: Georgia metros (Macon at 21%, Warner-Robins 20.6%, Atlanta 15.9%), Memphis 14.7%, Akron 13.3%, with Birmingham, Kansas City, and Salt Lake City also showing strong activity .

• Declining or slow markets: Honolulu (4.7%), New Orleans (4.9%), Seattle (5.5%), Pittsburgh (5.9%), and Portland (6.1%) saw the lowest flipping rates .

4. Sharper ROI Drops in Smaller Markets

Several midsize metros experienced dramatic drops in ROI:Spartanburg, SC (from 160% to 31%); Ocala, FL (125% → 50.6%); Lynchburg, VA (69.2% → 31%); Johnson City, TN (82.1% → 44.5%) .Larger cities like Fresno, New York, Pittsburgh, Chicago, and St. Louis also saw double-digit ownership declines, while Austin, Dallas, Houston, and San Antonio reported razor-thin single‑digit returns .

5. The Cost–Return Equation

• Flips below $225K median purchase price delivered ~46% ROI.

• Middle-tier flips ($225–400K) delivered ~22%.

• High-end flips (>$400K) fetched just ~19% ROI.Higher purchase prices often come with complex renovations and greater budgetary risks (

6. Cash Dominates

Cash acquisitions remain a hallmark: 62.2% of flips in Q1 were financed with all-cash deals—just slightly down from 63.4% in Q4 2024. In markets like Rockford, Toledo, Buffalo, and Naples, cash transactions exceeded 80% .

So, What’s the Outlook for Flippers?

• Tighter margins mean only those with strong capital reserves, speed, and local market insight can reliably turn a profit.

• Smaller, affordable markets remain the sweet spot, offering higher potential returns and less competition.

• Cash deals offer agility, avoiding high interest costs and refinancing risks.

• Risk still looms—from higher carrying costs to broader economic or interest-rate headwinds.

For flippers considering jumping into the game in Q2 or beyond, the key takeaways are clear:

1. Focus on under‑$225K markets or properties.

2. Keep as much liquidity on hand as possible.

3. Be prepared to hold longer if the market slips before resale.

Bottom line: Flipping is still profitable—but it’s a leaner game. Success now relies heavily on discipline, data, and staying local.

Source: ATTOM Q1 2025 U.S. Home Flipping Report (via BiggerPockets)