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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 76 January 2025 J O U R N A L • Phoenix (10.7%) • Tampa, Florida (10%) Conversely, the smallest home-f lip- ping rates were reported in: • Seattle, Washington (3.5%) • Des Moines, Iowa (3.7%) • Honolulu (3.8%) • Portland, Maine (3.9%) • Madison, Wisconsin (4%) Flipping Returns Down in Majori- ty of the U.S. The median $315,250 resale price of homes flipped nationwide in Q3 2024 generated a gross profit of $70,250 above the median investor purchase price of $245,000. That resulted in a typical 28.7% gross profit margin before expenses in Q3 2024, down more than two points from 31.2% in Q2 2024. It also was down from 29.7% in Q3 of last year. Profit margins decreased from Q2 to Q3 of this year in 106 of the 183 metro areas analyzed (57.9%) and were down annually in 105 of those markets (57.4%). Metro areas with the biggest quar- terly declines in typical profit margins during Q3 2024 included: • Salisbury, Maryland (ROI down from 129.8% in Q2 of 2024 to 61.8% in Q3 of 2024) • South Bend, Indiana (down from 89.4% to 36.4%) • Gainesville, Florida (down from 64% to 20%) • Peoria, Illinois (down from 78.2% to 36.4%) • Youngstown, Ohio (down from 54.1% to 20%) Metro areas with a population of at least one million and the largest quarterly profit-margin drop-offs were reported in: • Buffalo, New York (ROI down from 100% in Q2 of 2024 to 73.5% in Q3 of 2024) • Honolulu (down from 24.4% to 5.9%) • Tulsa, Oklahoma (down from 59.1% to 40.8%) • San Jose, California (down from 26.8% to 12.1%) • Pittsburgh (down from 115.3% to 101.8%) Profit Margins Suffer The recent fallback resulted in typical gross profit margins of less than 30% in 80, or four of every 10 metros with enough data to analyze in Q3 2024. That was up from 73 of the same group of metro areas in Q2 and 69 a year ear- lier. Typical profit margins surpassed 50% in Q3 2024 in only about one-third of the areas reviewed. Markets reporting the largest gross ROI for typical home f lips completed during Q3 2024 again were concentrat- ed in lower-priced areas, especially in the Northeast and South. They were led by the following markets: • Ocala, Florida (141.5% return) • Pittsburgh (101.8%) • Scranton, Pennsylvania (100%) • Flint, Michigan (98.9%) • Columbus, Georgia (93.8%) Aside from Pittsburgh, the largest investment returns in Q3 among metro areas with a population of at least one million were found in: • Cleveland (78.3%) • Rochester, New York (78.2%) • Baltimore (78%) • Richmond, Virginia (75%) Metro areas with a population of at least one million and the lowest ROI on typical home f lips in Q3 2024 were reported in: • Austin, Texas (4.5%) • Honolulu (5.9%) • Houston (6.2%) • San Antonio (6.6%) • Dallas (6.9%) Higher-End Markets Continue to Flourish The largest raw profits on me- dian-priced home f lips in Q3 2024, measured in dollars, were concentrated in areas of the West, South, and North- east regions where typical resale prices mostly topped $400,000. Eight of the top 10 fell into that category, led by: • San Francisco (typical gross profit of $234,000 on a median resale value of $1.1 million) • New York ($170,000 profit on a me- dian resale value of $600,000) • Washington, D.C. ($170,000 profit on a median resale value of $545,000) • Salisbury, Maryland ($168,016 profit on a median resale value of $440,000) • Boston ($160,000 profit on a medi- an resale value of $625,000) The South continued to dominate the low end of the spectrum, with 13 of the 15 lowest raw profits on me- dian-priced transactions during the third quarter. Most came in areas with median resale prices below $300,000, with the smallest reported in: • Warner Robins, Georgia (typical $3,500 profit on a median resale value of $268,500) • Killeen, Texas ($5,302 profit on a median resale value of $240,627) • Boise, Idaho ($7,936 profit on a me- dian resale value of $439,469) • Lubbock, Texas ($12,372 profit on a median resale value of $200,688) • Amarillo, Texas ($14,852 profit on a median resale value of $170,852) RECORD HIGH WIRE FRAUD REPORTED IN Q3 W ire and title fraud risks reached new heights in Q3 2024, according to FundingShield's latest Wire Fraud Risk Report. An alarming 46.43% of transac- tions in an $82 billion portfolio of resi- dential, commercial, and business-pur- pose loans revealed vulnerabilities. Each problematic loan exhibited an average of 2.23 issues, underscoring a widespread lack of adequate controls among closing agents and lenders.