The DC Home Flipping Market: Still Profitable But Losing Some Steam

• June 7th 2018

by Nena Perry-Brown

Between steady homebuyer demand in the DC region and historically low levels of inventory, the pickings are slim for home flippers and profits are slipping accordingly.

ATTOM Data Solutions’ latest home flipping report shows that 6 percent fewer homes were flipped in the DC area during the first quarter of 2018 compared to the first quarter of 2017. Among zip codes in DC proper with more than 10 flips, the average gross profit per flip was $223,867.

The most profitable zip codes for flips in the District look quite similar to last year, with 20019 and 20032 leading the pack. The 20019 zip code, which encompasses neighborhoods including Benning Ridge and Deanwood, had the highest number of flipped homes (41) and the greatest return on investment (ROI) for flippers, at 94.3 percent. This ROI represents a 23 percent drop year-over-year. 

The 20032 zip code, which includes Congress Heights and all neighborhoods to the south, tied the 20017 zip code for the smallest number of flipped houses (13), but had an ROI of 89.2 percent, just a 4 percent decrease year-over-year. In both 20019 and 20032, more than one in 4 houses was flipped and investors made a gross profit of $165,000. The proportion of flipped homes correlates with the number of offers per active listing in these sections of DC. 

Of the remaining zip codes in DC with more than 10 flips (including 20017, 20020 and 20002), only Petworth's 20011 saw a year-over-year increase in the ROI. Homes in this zip code were purchased for a median of $430,000 and sold for $757,000, grossing the largest profit ($327,000) and yielding a 76 percent ROI, 36 percent higher than last year. 

The 20011 zip code is one of five zip codes across the country where the average gross flipping profit exceeded $325,000; three were in California and the other was in Jersey City, New Jersey. Meanwhile, one-time top profit-generating zip code 20018 has fallen out of the picture this year, having not seen enough houses flipped to make a fair comparison.

For the purposes of this study, a home flip occurs when a property is sold twice within a year based on publicly-recorded sales data. Any costs associated with renovating a property are not factored in to 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/the-dc-home-flipping-market-still-profitable-but-losing-some-steam/14082.