Full Breakdown
Decline in Home Flipping Profits: A National and Local Perspective
3/23/2026, 11:53:20 PM
Overview of the Home Flipping Market
Home flipping, the practice of purchasing undervalued properties, renovating them, and reselling them for profit, has seen a significant decline in profitability across the United States. According to ATTOM's 2025 year-end report, the gross profit from flipped homes dropped to $65,981, a decrease from $77,000 in 2024, marking a return on investment (ROI) of 25.5%, the lowest since the Great Recession in 2008. This downturn is attributed to rising home prices, increased renovation costs, and a slowdown in buyer demand, leading to a reduction in the number of homes flipped nationwide to approximately 297,000, a 3.9% decrease from the previous year.
National Trends and Challenges
The home flipping market experienced a boom in the years following the Great Recession, peaking in 2012 with profit margins of 61.1%. However, the pandemic-induced surge in flipping activity has waned, with only 8.6% of all home sales in 2022 being flips. The current market conditions reflect a broader affordability crisis, with many potential buyers unable to compete in a constrained market. Rob Barber, CEO of ATTOM, noted that “competition for homes remains strong in many markets due to constrained supply,” complicating the ability for investors to secure profitable deals.
Local Market Dynamics: The Tri-Cities Region
In the Tri-Cities region of Tennessee and Virginia, home flipping has also declined, with a 9.6% drop in transactions to 556 in 2025. Despite this decline, local investors reported stronger returns compared to the national average, with the Johnson City metro achieving a gross ROI of 76.7% and the Kingsport-Bristol metro at 73.1%. The median purchase price for flipped homes in Johnson City was $150,000, while the resale price reached $265,000, yielding a gross profit of $115,000. In Kingsport-Bristol, the median buy price was $130,000, with a resale of $225,000, resulting in a gross profit of $95,000.
Shifts in Buyer Demographics
The profile of buyers for flipped homes has shifted since the pandemic, with a notable decrease in cash buyers—indicative of investor activity. In Johnson City, cash buyers fell from 39.7% in 2019 to 32.6% in 2025, while in Kingsport-Bristol, the share decreased from 31.1% to 28.1%. Conversely, FHA-financed purchases increased, particularly in Kingsport-Bristol, suggesting that renovated homes are increasingly serving entry-level buyers who face challenges in the traditional market.
Exceptions to the Trend: Profitable Markets
While the overall trend shows declining profitability, certain metropolitan areas have bucked this trend. For instance, Binghamton, New York, saw a 126.4% increase in home flipping rates, while other cities like Boulder, Colorado, and Greeley, Colorado, also reported significant gains. Notably, Peoria, Illinois, experienced a rise in profit margins from 61.2% to 91.4%, highlighting that budget-friendly markets can still yield substantial returns.
Conclusion and Future Outlook
The current landscape of home flipping reflects a transition from an era of easy profits to a more challenging environment requiring strategic investment. The structural conditions in the Tri-Cities, characterized by a large stock of older homes and consistent demand from first-time buyers, suggest that while margins may be tightening, opportunities for profitable flipping still exist. As the market continues to evolve, investors will need to adapt to maintain profitability in a competitive and changing real estate environment.
