Home Flipping Dips in Early 2025 as Bargain Deals Vanish

The U.S. housing market has shown signs of cooling in early 2025, and even experienced flippers and cash-heavy investors are starting to feel the strain. A combination of economic uncertainty and rising costs driven by new tariffs and material price hikes has made it harder to profit from flipping homes.

According to ATTOM’s Q1 2025 U.S. Home Flipping Report, 67,394 homes and condos were flipped between January and March, making up 8.3% of all home sales. While this was a slight bump from the 7.4% share in Q4 2024, it’s lower than the 8.7% seen in Q1 2024. That number also represents the smallest quarterly total of flips since 2018.

With the national median home price sitting at $416,900 and the average price near $503,800, affordability challenges are pushing first-time buyers and investors to the sidelines. At the same time, returns for flippers are slipping. The average flipped home in Q1 brought a 25% return before expenses down from 28% the previous quarter and well below the 48.8% peak in late 2020.

Flippers paid a median price of $260,000 for homes and resold them for $325,000, netting a gross profit of $65,000—$5,000 less than in Q4 2024.

“While today’s market favors sellers with high prices, it’s also squeezing the margins for investors who struggle to find deals,” said Rob Barber, CEO of ATTOM.

Tariffs & Construction Costs Drive Expenses Up

Tariffs are adding pressure to the bottom line. In April, the federal government implemented a 10% tariff on all imports. For real estate investors, this translates into higher costs for construction and renovation materials expenses that get passed along to end buyers.

The National Association of Home Builders (NAHB) has flagged lumber as one of the most affected materials. Tariffs on wood and other key supplies are expected to more than double by fall 2025.

“Higher material prices mean higher housing costs,” said Dan Mitchell, a Tennessee homebuilder. “That’s going to limit what we can offer and what buyers can afford.”

According to NAHB’s April data, suppliers have increased their prices by 6.3% in response to tariff announcements, adding an estimated $10,900 to the cost of building a single home.

Investors Eye Cheaper Markets for Better Margins

Flippers are becoming more selective, gravitating toward lower-cost markets where margins are stronger. ATTOM found that in areas where investors bought homes for under $225,000, the average ROI was 46.4%. By contrast, homes bought for $225,000–$400,000 delivered an ROI of 22%, and homes priced over $400,000 returned just 19%.

Nationwide, 62.2% of all flips in Q1 were all-cash purchases, a slight drop from the previous quarter’s 63.4%, but essentially even with Q1 2024.

The highest shares of all-cash flips were seen in:

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

Flipping Trends by Region

Flipping activity rose in most metros from Q4 2024 to Q1 2025, with increases in 132 of the 173 tracked markets. However, year-over-year comparisons tell a different story—two-thirds of metros saw a decline in flipping share compared to Q1 2024.

Metros with the highest flipping share:

• Macon, GA (21%)
• Warner Robins, GA (20.6%)
• Atlanta, GA (15.9%)
• Memphis, TN (14.7%)
• Akron, OH (13.3%)

Among major metros (populations over 1 million), the highest shares were in:

• Birmingham, AL (12.8%)
• Kansas City, MO (11.6%)
• Salt Lake City, UT (11.1%)

Lowest shares among large metros:

• Honolulu, HI (4.7%)
• New Orleans, LA (4.9%)
• Seattle, WA (5.5%)
• Pittsburgh, PA (5.9%)
• Portland, OR (6.1%)

Profit Margins Are Shrinking

While flipping still yields profits, margins are declining. Homes flipped in Q1 sold for a median of $325,000 with a $65,000 gross profit over the $260,000 median purchase price. Profit margins fell quarter-over-quarter in nearly 46% of tracked metros and were lower year-over-year in 63%.

Biggest quarterly ROI drops:

• Spartanburg, SC (160.2% → 31.3%)
• Ocala, FL (125% → 50.6%)
• Chattanooga, TN (125.6% → 81.3%)
• Lynchburg, VA (69.2% → 31%)
• Johnson City, TN (82.1% → 44.5%)

Among large metros:

• St. Louis, MO (49.3% → 27.3%)
• Fresno, CA (51.3% → 37.8%)
• Pittsburgh, PA (108.7% → 100.4%)
• New York, NY (44.2% → 36.1%)
• Chicago, IL (52.6% → 44.8%)

Best and Worst Markets for ROI

Only 45 out of 173 metros posted profit margins above 50%. The most profitable areas were concentrated in the Midwest and Northeast.

Top ROI markets:

• Buffalo, NY (102.1%)
• Pittsburgh, PA (100.4%)
• Scranton, PA (89.9%)
• Peoria, IL (89.1%)
• Rockford, IL (87.7%)

Among large cities:

• New Orleans, LA (76.5%)
• Memphis, TN (69.7%)
• Philadelphia, PA (69.6%)

Markets with the lowest flipping ROI:

• Austin, TX (1%)
• Dallas, TX (3.7%)
• Houston, TX (5%)
• Salt Lake City, UT (6.5%)
• San Antonio, TX (6.9%)

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