Profit margin on flipping a home is at a 17-year low due to high prices

"The shrinking profitability for home flipping is largely due to home prices, which continue to climb nationally, albeit at a slower pace, driving up acquisition costs for investors. "We're seeing very low profit margins from home flipping because of the historically high cost of homes," said Rob Barber, Attom's CEO. "The initial buy-in for properties that are ideal for flipping, often lower priced homes that may need some work, keeps going up.""

"Gross profits - the difference between what an investor paid for a property and what it sold for - fell 13.6% in the second quarter from a year earlier to $65,300, the firm said. Attom's analysis defines a flipped home as a property that sells within 12 months of the last time it sold. Home flippers buy a home, typically with cash, then pay for any repairs or upgrades needed to spruce up the property before putting it back on the market."

From April through June the typical investor-flipped home yielded a 25.1% return before expenses, the lowest pre-expense margin since 2008. Gross profits — the difference between purchase and resale — fell 13.6% year over year to $65,300. Flipped properties are those resold within 12 months of prior sale. The median investor purchase price reached a record $259,700, while the median resale of flipped homes held at $325,000. Rising national home prices, scarce inventory and fierce competition for lower-priced homes have driven acquisition costs up, eroding profit margins that once exceeded 60% in 2012.

Read at The Mercury News