As Home Flipping Profits Drop in the U.S., D.C. Doesn't Follow Suit

• June 12th 2020

by Nena Perry-Brown

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A new report on the home flipping market in the U.S. shows that flipping is at a 14-year high, although profits are falling. For DC, however, profits are going up while slightly fewer flips are being done.

During the first quarter of 2020, 9.6% of houses sold in DC proper were flips, according to the new ATTOM Data Solutions report, a one percent drop compared to the first quarter of 2019. The 144 flips sold in the city were purchased for a median price of $300,000 and sold for a median price of $501,500, yielding a gross profit of $201,500. For context, gross profits were $194,250 in the first quarter of 2018 and $163,250 in the first quarter of 2019. 

The gross return on investment (ROI) citywide for flips was 67.2% in the first quarter of 2020 compared to 47.3% in the first quarter of 2019; ROI still has not caught up to that seen in the first quarter of 2018, however, when it was 73.6%.

Part of why profits seem to be rising may be due to the concentration of flips east of the Anacostia River, where ROI has tended to be higher than elsewhere in the city. Only four zip codes in DC had more than ten houses flipped in the first quarter, led by 35 flips in the 20019 zip code of Ward 7. In 20019, nearly 27% of houses sold were flips, with a gross profit of $190,000 and a gross ROI of 86.4%. 

The 20011 zip code of Petworth and the 16th Street Heights had the second highest number of flips, with 23 accounting for 13.5% of sales in the first quarter. These yielded a gross profit of $235,000, but a gross ROI of 56.6%. The 20020 zip code, which includes Anacostia, Hillcrest, and Barry Farm, had the highest ROI this past quarter, with 90.4% ROI on 20 flips. Those flips accounted for one in five houses sold in the zip code this past quarter, a 14% increase year-over-year.

Note — The report does not factor in renovation costs when calculating the ROI, although experienced flippers estimate those to be anywhere from 20-33 percent of the original purchase price.

This article originally published at https://dc.urbanturf.com/articles/blog/as-home-flipping-profits-drop-in-the-us-dc-doesnt-follow-suit/16949.