House flipping profits have plummeted to their lowest levels in nearly 20 years, according to a new analysis from the Pacific Research Institute published this month. The commentary by Kerry Jackson, the institute's William Clement Fellow in California Reform, examines how California's legislative efforts to restrict investor access to distressed properties coincide with a sharp decline in flipping activity and returns. Jackson argues that lawmakers are targeting a business model that actually improves housing stock and neighborhood values rather than harming prospective homebuyers.

Just 7.4% of all housing sales in 2025 were flipped single-family homes or condominiums, down from 7.6% in 2024, with last year's total sales reaching not quite 3 million units. Both figures fall below the 2022 peak, when more than 454,000 units—representing 8.7% of total sales—were flipped. Per-unit profit has tumbled from $77,000 in 2024 to $65,981 in 2025, and one in 10 flips now breaks even or loses money. California has passed multiple bills since 2021 attempting to limit flippers' market access, including Senate Bill 1079, which gave tenants and nonprofits 45 days to outbid investors at foreclosure auctions, and Assembly Bill 1837, which restricted out-of-state bidders. Assembly Bill 1957, which passed the Assembly and now sits in the Senate, seeks to further clamp down on alleged workarounds.

Rob Barber, CEO of data company ATTOM, notes that "competition for homes remains strong in many markets due to constrained supply," adding that "with prices staying elevated, investors are finding it harder to secure deals that deliver strong returns." Jackson writes that the widespread belief that flippers price out owner-occupant buyers is "turned upside down by the data," pointing out that flipping activity has declined even as housing competition intensifies. Scott Beyer, CEO of the Market Urbanism Report, says flippers tend to be "young, jack-of-all-trades entrepreneurs, not big investors," who use profits from flips to "fund bigger endeavors, whether broader real estate investing or large development projects."

Jackson argues that flippers serve a critical function by purchasing and renovating homes in hopeless states of disrepair, thereby increasing nearby property values and improving neighborhood aesthetics. With a national housing deficit estimated at about 4.7 million units, he contends that renovating and flipping abandoned or distressed homes pushes the scarce housing stock upward rather than reducing availability. The analysis points out that most buyers today don't want houses requiring extensive work, but flippers—who increasingly put their own money into properties—are willing to take on fixer-uppers. This provides an exit strategy for sellers going through financial hardship who might otherwise struggle to sell homes as-is or afford necessary repairs themselves. Beyond housing market benefits, Jackson notes that flippers generate business for contractors and subcontractors, creating and maintaining primarily working-class jobs.

Jackson warns that if California lawmakers succeed in further restricting flipping activity, overall sales and profits will continue to fall in the state. He concludes that while California's housing market needs repair, outlawing or hobbling a legitimate enterprise won't improve matters—especially when that enterprise renovates distressed properties, expands housing stock, and supports working-class employment. Rather than villainizing flippers as the cause of California's housing crisis, the analysis suggests legislators should allow willing buyers and sellers to engage freely in these transactions that ultimately benefit communities.