LOS ANGELES, California: Flipping homes is becoming far less lucrative as high housing prices eat into investor returns.

From April through June, the typical home flip yielded a 25.1 percent return on investment before expenses, the lowest margin since 2008, according to real estate data firm Attom. Gross profits — the difference between purchase and resale prices — slid 13.6 percent from a year earlier to US$65,300.

Attom defines a flip as a property resold within 12 months of its last purchase. Investors generally buy with cash, make repairs or upgrades, and then relist the home.

"The initial buy-in for properties that are ideal for flipping, often lower-priced homes that may need some work, keeps going up," said Attom CEO Rob Barber. "We're seeing very low profit margins from home flipping because of the historically high cost of homes."

The second quarter's median purchase price of flipped properties hit $259,700, the highest since Attom began tracking in 2000. The median resale price was $325,000, unchanged from the first quarter.

Home flipping has steadily lost profitability over the past decade, as rising prices inflated acquisition costs. In late 2012, the average return topped 62.9 percent before expenses, more than double today's levels.

A shortage of affordable homes and fierce competition for entry-level properties are adding to investor costs. At the same time, U.S. home sales have slowed sharply since 2022, when mortgage rates began climbing from pandemic-era lows. Last year sales sank to their weakest in nearly three decades, and activity has stayed sluggish this year.

As homes linger on the market longer, overall inventory has risen, benefiting investors and cash buyers who can sidestep high mortgage rates.

Despite slimmer returns, flipping remains a significant part of the housing market. Roughly 78,621 single-family homes and condos were flipped in the April-June quarter, accounting for 7.4 percent of all home sales. That share was down slightly from both the prior quarter and the same period last year.

More broadly, investor activity is on the rise. Real estate data provider BatchData said investors bought 345,752 homes in the second quarter, up 15 percent from the first quarter but down 12 percent year-on-year. Investors represented 33 percent of all home purchases, the highest share in at least five years, compared with an average of 18.5 percent between 2020 and 2023.

All told, investor-owned properties now account for about 20 percent of the nation's 86 million single-family homes.