Housing investment failed hard across the country in 2025, netting investors their lowest profit margins in nearly 20 years.
Investors paid a median price of just over $259,000 for a home last year, making it about $325,000, according to a new report from ATTOM (1), a national real estate data firm. This resulted in average gross profits of $65,981, or a 25.5% return on investment.
That ROI, the report notes, is the lowest since the Great Recession of 2008, and a 58% drop from 2012’s peak ROI of 61.1%.
Additionally, overall single-family home and condo sales fell in 2025 to just over 297,000 units, which ATTOM said is the lowest amount since 2020.
The ATTOM report attributed the decline in home sales profits to several factors, including higher mortgage rates and home prices.
“As prices remain elevated,” said ATTOM CEO Rob Barber, “investors are finding it more difficult to secure deals that generate strong returns.”
Joel Berner, senior economist at Realtor.com (2), also noted concerns about pricing when it comes to home renovations.
“Affordability is what keeps people out of the market, so they are not very receptive to paying more for a house whose finishes have been chosen by someone else,” he said. “They prefer to buy fixer-upper homes and put up the sweat equity themselves.”
The median home price in the United States in 2025 ranged from $508,000 to a post-pandemic high of $534,000 (3).
Meanwhile, Harvard University’s Joint Center for Housing Studies found that the average monthly mortgage payment (4) for a median-priced home increased 108% between 2020 and 2025, from $1,200 to more than $2,500. Homebuyers needed an annual income of $130,000 to afford that cost, which, up from $70,000 in 2020, the Harvard report called “historically high.”
Additionally, the 30-year fixed mortgage rate rose to about 7% (5) in January 2025, although it averaged 6.60% for the year, slightly below the previous two years but almost 3% higher than in 2012, during the home renovation boom. At the time of writing this article, the average for 30-year fixed-rate mortgages is 6.38% (6).
However, despite the bleak finances, the ATTOM report offered good news for home lovers.
It found that while flipped home sales fell in 142 of the 215 metro areas it surveyed, several other places actually saw an increase in flips. These include a 136% year-over-year increase in Binghampton, New York and a 72% increase in Boulder, Colorado. Greeley, Colorado, saw a nearly 50% increase in pitches, while Lexington, Kentucky was up 40% and Scranton, Pennsylvania, up 31 percent.
“Those metro areas where yields have improved are especially affordable, so investors can get in for less money upfront and still end up with a listing that’s affordable for buyers on a budget,” said Realtor.com’s Berner.
To that end, home lovers in Peoria, Illinois; Huntington, West Virginia; Lake Charles, Louisiana; Cedar Rapids, Iowa, and Tuscaloosa, Alabama, enjoyed profit margin increases of between 20% and 30% year over year in 2025.
Read more: 5 Essential Money Moves You Should Make Once You’ve Saved $50,000
Changing in a difficult housing market is not easy, and it is recommended to have enough money available to purchase the home and absorb excess costs, as well as a lot of patience in case the change does not happen immediately.
“Flippers have to be more creative to stay profitable,” said ATTOM’s Barber. “That could include buying older homes, as the median property flipped in 2025 was built in 1978, the oldest since we started tracking.”
Barber also recommended employing “more disciplined renovation strategies,” which include looking for simpler changes (7) to create a living space that buyers will love, rather than major projects that consume time and money that you won’t get back.
As demonstrated by the places ATTOM flagged as 2025 success stories, flipping homes in affordable markets is more likely to result in lower overall costs for you, a lower list price for the eventual buyer, and higher profit margins overall. Luxury homes and expensive neighborhoods are less likely to generate solid returns in a struggling housing market.
Real estate investment lender RCN Capital suggests looking for foreclosed homes (8), which they noted are often sold “at prices well below market value” and “present ideal opportunities for investors to buy at a deep discount, renovate them, and sell them for a profit.”
And investing in a property that you would be willing to rent (9) could help you recoup the costs of the loan through rental payments while allowing you to wait for the right market conditions to finally flip it.
Join over 250,000 readers and get the best Moneywise exclusive stories and interviews first – clear insights curated and delivered weekly. Subscribe now.
We rely only on verified sources and credible third-party reports. For more details, see our Ethics and editorial guidelines..
ATOM (1); real estate agent.com (2); Federal Reserve Bank of St. Louis (3); Harvard Joint Center for Housing Studies (4); Yahoo Finance (5); Federal Reserve Bank of St. Louis (6); SLG Property Offers (7); RCN Capital (8); Kiavi (9)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
