House flippers aren't giving up on Las Vegas, even though profits are sliding here and rising elsewhere, a new report shows.
Flipping accounted for 8.7 percent of home sales in Southern Nevada in the quarter ending Sept. 30, and sellers booked an average gross profit of $39,367 per deal, a 23.7 percent return, according to RealtyTrac.
In the same period last year, flipping comprised 8.2 percent of home sales in the Las Vegas area, and sellers earned an average profit of $39,808, a 26.2 percent return.
Nationally, flipping made up 5 percent of home sales in the third quarter, up from 4.3 percent a year earlier. Sellers made an average profit last quarter of $62,122 per deal, a 33.8 percent return, up from $61,781, a 32.7 percent return, a year earlier, RealtyTrac reported.
Across the U.S., flippers cut back on deals last year because of slowing price growth and a “shrinking inventory of flip-worthy homes,” but investors “have started to jump back on the flipping bandwagon in 2015,” RealtyTrac Vice President Daren Blomquist said in the report.
The Irvine, Calif.-based company counts a flip as a home whose owners sold it within a year of buying it. The reported profits represent the sales price minus the purchase price and do not account for renovations or other costs the flipper may have incurred.
Flipping was a hallmark of the real estate bubble last decade, when investors, often with little or no experience but backed by easy money, bought homes and sold them for profit a short time later. The get-rich-quick tactic helped inflate Las Vegas home prices until the bubble burst and the economy crashed.
Few places got as crazed with flipping as Southern Nevada, a poster child for the housing boom and bust. In late 2004, a peak of roughly 19 percent of single-family home sales in the valley were flips, compared with a national peak of 8 percent in early 2006, according to RealtyTrac.
Today, despite more lucrative deals elsewhere, Las Vegas remains one of the most popular places in America to flip houses. Industry pros have attributed this to flipping-focused reality TV shows, as well as Las Vegas’ lower home prices, transient population and long-standing image as an easy place to make a quick buck.