An upside-down market left flippers hanging in 2025
Buy a house. Fix up the house. Sell the house.
All in less than year.
For almost two decades, the formula demanded a lot of hard work but often generated head-turning profits for home-flippers. HGTV even cashed in on the craze with several hit shows, including Bargain Block and Flip or Flop.
But like Tarek El Moussa and Christina Hall, all good things come to an end. Sometimes in dramatic fashion.
Just ask any hardworking home-flipper, if you can find one.
FAST-RISING COSTS, SLOW-SELLING HOMES ARE A HARD ONE-TWO COMBO FOR FLIPPERS
Home-flipping sales plummeted last year to the lowest level since 2020, when the pandemic pounded the housing market for the first half of the year before rebounding in the second half.
More concerning is the dramatic freefall in the gross profits and the return on the investment, tumbling to levels last reached during the Great Recession. You know, when foreclosure notices exceeded home sales in California.
California home-flippers are among the hardest hit in the nation. They are getting hammered with a critical shortage of homes on the market, fast-rising costs for home-improvement projects – largely from tariffs – small price gains and slumping sales.
CENTRAL VALLEY FLIPPERS ENJOY THE BEST RETURNS, WINE COUNTRY SOURS
It’s a money-losing formula.
How bad? Nationwide, the average return on investment – the purchase price for a home compared to the sale price – was a paltry 25.5%, the lowest since 2008, according to ATTOM Data.
In California, it was worse. A lot worse at 18.1% (see table, below).
Only three of 12 cities in the state – Bakersfield, Fresno and Stockton – had returns on investment that surpassed the national average.
Six cities had profit margins (another word for ROI) of less than 20%, including a staggering low 11.5% in Santa Rosa.
Now, a few cities in California had some of the largest profits in the nation, including $224,500 in San Jose and $200,000 in San Francisco – more than three times the national average of $66,000, according to ATTOM. But given the hefty prices to buy, the return on investment was a rather low 16% and 22%, respectively.
But here is the nail to the head – the gross profits don’t include the exorbitant costs of fixing, maintaining and selling a home. From fixing a leaky roof or shower to homeowners’ insurance, home-flippers are getting whipsawed. If home-flippers bought the home with a loan, profits shrink further. Add a sales commission and what was once a decent payday could become a significant loss.
FLIPPERS MUST DEVELOP ‘MORE DISCIPLINED RENOVATION STRATEGIES’
Blame the housing market, where there are few homes and little – if any – price gains, according to the California Association of Realtors.
“Competition for homes remains strong in many markets due to constrained supply,” said Rob Barber, CEO of ATTOM. “With prices staying elevated, investors are finding it harder to secure deals that deliver strong returns.”
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Buy low, sell high – an adage that home-flippers embrace – has disappeared along with their profits.
“Flippers are having to get more creative to maintain profitability,” Barber said.
In other words, bypassing some eye-catching projects – like high-end countertops in the kitchen or a spa-worthy primary bath – could become just some of the decisions home-flippers make to boost or even protect the bottom line.
“That could include taking on older homes, as the median flipped property in 2025 was built in 1978, the oldest since we began tracking, along with tighter cost control and more disciplined renovation strategies,” Barber said.
It could be worse, really
Gross profits in …
- Montana: 1.2%
- Idaho: 3.9%
- Texas: 5.4%
- Utah: 7.1%
- New Mexico: 7.6%
Source: ATTOM Data
| City | Flipped homes 2025 | Gross profit | Return on investment |
|---|---|---|---|
| California | 24,688 | $115,000 | 18.1% |
| Bakersfield | 790 | $92,250 | 41.4% |
| Fresno | 735 | $105,199 | 39.8% |
| Los Angeles | 8,410 | $140,000 | 16.1% |
| Riverside | 3,706 | $96,250 | 20.7% |
| Sacramento | 1,755 | $93,000 | 21.8% |
| San Diego | 2,303 | $154,844 | 19.3% |
| San Francisco | 2,067 | $200,000 | 22.2% |
| San Jose | 896 | $224,500 | 16.3% |
| Santa Barbara | 188 | $104,500 | 13.6% |
| Santa Cruz | 106 | $154,100 | 18.5% |
| Santa Rosa | 245 | $77,375 | 11.5% |
| Stockton | 464 | $108,000 | 32.5% |
Source: ATTOM Data
