Home flipping has faced challenges recently due to rising home prices and interest rates. However, there might be a shift happening. A recent report indicates that profit margins for flippers have risen for the first time in nearly two years.
In the first quarter of 2026, average profit margins on flipped homes increased to 25.4%, a slight rise from 24.7% in the last quarter. This uptick marks the end of a downturn that lasted since 2008, according to a report by the real estate analytics company, ATTOM.
“Seeing an increase in flip profits after such a long time is promising for investors,” noted Rob Barber, CEO of ATTOM, in a statement.
He added that while the market is still more competitive compared to peak profit times, the current profitability suggests a possible stabilization. Yet, success still largely hinges on local market dynamics; some areas are thriving while others are not yet seeing significant gains.
It’s been quite a stretch since the last quarterly rise, which occurred in early 2024 when typical investment returns were around 35%. The recent increase broke a seven-quarter streak of declines, though it only nudged up by less than 1 percentage point.
This recent rise in margins could be viewed as a needed shift for home flippers.
Last year’s peak in median home sales prices had caused average gross profits to decline from $77,000 to $65,981, as reported by ATTOM.
But what’s driving this modest rise? Could it be simply softer home prices? Barber indicates that the situation is not entirely about that.
“While some easing in price pressures may have helped, it appears this rise is more about market stabilization rather than a sweeping change,” he explained.
According to Barber, returns are still trailing last year’s levels. The long hold times and varied market performances imply that investors are adjusting to tougher environments, rather than riding high on a significant drop in home prices.
Where Flipping Works and Where It Doesn’t
Profitability in home flipping varies widely across the country. Some major cities see substantial profits, while others, particularly in Texas, are only making modest gains.
Pittsburgh reported the highest return on investment, whereas Austin had the lowest. Interestingly, this aligns with the median home prices: Pittsburgh’s is around $250,000, while Austin’s sits at $475,000. Clearly, price plays a key role.
The cities with the largest typical profit margins include Pittsburgh (85.9%), Buffalo, New York (84%), Virginia Beach (74.9%), Baltimore (65.9%), and Philadelphia (62%).
Barber pointed out that in lower-priced markets, investors have a greater opportunity to generate value due to lower entry costs, with demand remaining strong, especially from buyers who are budget-conscious. This is evident in cities like Pittsburgh and Buffalo, where demand and manageable acquisition costs lead to higher returns.
Conversely, areas with the tightest profit margins often find themselves in isolated star states. These locales performed well during the pandemic, but price increases have been notable since then.
In Austin, for instance, typical profit margins were among the lowest at just 2%, followed by Dallas (4.3%), San Antonio (5.1%), Houston (7.2%), and Salt Lake City (9.5%).
The report suggests that homes priced between $100,000 to $200,000 typically yield a 32% profit margin for flippers.
It might seem logical that lower-priced homes generate higher returns, but that’s not always true. Homes initially bought for under $50,000 more often lead to losses, typically around 14%. This is likely due to the significant renovations required.
Price is indeed a factor in flipping success, but there are other elements at play. Even in cities like Baltimore, which has an abundance of older, inexpensive housing, buyer demand is crucial.
Pittsburgh evolved into a “shelter market” in late 2025, drawing buyers looking for value in more affordable properties.
The city’s rising price per square foot and increasing inventory suggest a healthy market, despite its lower starting prices, according to data from Realtor.com.
Tarasa Hurley, a broker from the area, shared insights on why Pittsburgh appeals to flippers. She noted that homes can sometimes be picked up for as little as $20,000, renovated for about $50,000, and then sold for $160,000. This kind of potential return draws both seasoned developers and those seeking quick profits with less effort.
However, not every old home is a good candidate for flipping. Investors must weigh not only the purchase price but also renovation expenses and resale values in specific neighborhoods—real estate success can change significantly from one street to another.
Hurley cautioned, “If flippers think, ‘I’ll just spruce this place up,’ they might be in for a harsh surprise.” Older properties could hide serious issues, like structural defects or outdated systems, and can require extensive, costly repairs.
Skilled labor is essential for renovations, and finding good help can be increasingly difficult and pricey. Hurley mentioned that what sets Pittsburgh apart is the availability of capable workers.
“There are plenty of knowledgeable folks here,” she remarked. In other places, finding people with that level of expertise can be tough or too expensive.
Moreover, Hurley noted that sizable employers like Google and Apple are continuously bringing in new workers, leading to a steady demand for housing. With planning and the right resources, Pittsburgh can indeed be a flipper’s dream, but it requires knowledge and local connections.
“We’re a bit of a rarity,” she emphasized. “Just because you can acquire a home for $50,000 doesn’t mean you should.”
Cash Purchases in Flipping
ATTOM reports that cash purchases continue to dominate the flipping scene, with 61.1% of homes being bought outright, a slight dip from 61.4% previously.
Additionally, flipped homes are taking longer to sell. On average, it took 165 days to sell a typical flipped home in the first quarter—up from 160 days last quarter and 164 days from the same time last year.
Jason West, a cash buyer in Louisville, Kentucky, mentioned that the market feels a bit oversaturated now, resulting in longer selling times. “We were definitely spoiled a few years back,” he reflected. “Now, we sometimes think, ‘Why isn’t this selling?’ Yes, homes are moving, but the delays are notable.”
“I think everyone is adjusting to how easy it once was.”
