Apr 23, 2024 - Real Estate

Flippers aren't profiting as much in North Texas

Data: ATTOM; Note: A flip is defined as any transaction between an unrelated buyer and seller within 12 months of a previous transaction; Chart: Axios Visuals

Dallas-Fort Worth saw one of the biggest dips in house-flipping profit margins last year, per a report from real estate data company ATTOM.

Why it matters: Investors are flipping fewer houses as the return on investment has dropped.

  • That could lead to a smaller supply of more affordable homes in North Texas, where about 9% of flipped houses are purchased by people using Federal Housing Administration loans — typically first-time homeowners.

The big picture: For years, southern metros like D-FW attracted investors as quickly as new residents. Now the South is seeing some of the biggest drops in house flipping rates, per ATTOM.

  • Investors are getting a 27.5% return on investment nationwide, which hasn't been this low since 2007.
  • House flipping activity dropped 29.3% last year, the biggest annual decline since 2008, ATTOM found.

Zoom in: House flipping is up 74% from a decade ago in D-FW. The region hit its house-flip peak in 2019 with nearly 11,000 properties bought, fixed up and then sold within a year.

  • A little more than 7,100 houses were flipped last year, 10% less than in 2022.

By the numbers: The four major Texas metros saw the weakest home-flip returns in the country among metros with a population of 1 million or more, according to ATTOM.

  • Austin was the only one to record a loss at $18,640, based on the median price flippers buy and the median price of the sale.
  • The three others still recorded profits, though less than in previous years — Dallas ($14,817 profit), Houston ($16,932 profit) and San Antonio ($12,289 profit).
  • Dallas' 4.4% return on investment last year was down from the 12.5% return in 2022.

Yes, but: Dallas ranks third in the top U.S. cities for individuals — not investors — buying a house that needs some love, per a StorageCafe report.

  • About 12% of active home listings are fixer-uppers, which could save an individual homebuyer about $217,000 on average. Even with about $105,000 in home improvement costs, it can be cheaper than buying turnkey.

The bottom line: Flipping houses might not be as lucrative for investors in D-FW as it once was, but the Dallas area is still one of the top markets for fixer-uppers.

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