"The strong returns for home flippers in the first quarter demonstrates that there is still a need in this recovering real estate market for move-in ready homes rehabbed to more modern tastes, particularly given the dearth of new homes being built," said Daren Blomquist, vice president at RealtyTrac.
Read MoreCrowdfunding house flippers: Risks and rewards
Flips are now giving investors an average gross return of 35 percent, but with prices higher, investors are discovering it's increasingly difficult to find properties that will make good flips. Certain markets are offering much better odds.
"Markets with the combination of distressed inventory, affordability and demand that are yielding the best flipping returns include places such as Baltimore, several metros in central Florida, Detroit, Tucson, Pittsburgh, Memphis and Chicago," added Blomquist. The average return for flippers in Baltimore was 94 percent, the highest for any city, according to RealtyTrac.
Read MoreRates hit REITs: Should you dump them?
Witness the strong flip returns as reported by RealtyTrac: Tampa, Florida (57.2 percent), Pittsburgh (55.2 percent), Memphis, Tennessee (54.8 percent), Chicago (52.9 percent), Seattle (49.0 percent), New York (47.1 percent), Washington, D.C. (44.2 percent) and Boston (44.0 percent).
Another change in the landscape is house flippers increasingly are selling their homes to other investors or to second homebuyers. This may be due to the very strong single-family rental market and large-scale institutional investors who have now established management structures and are looking for turnkey homes to rent.