Photographer: Jacob Kepler/Bloomberg

House Flipping Is Making a Comeback in Las Vegas

More than 10 percent of recent sales were flips, the highest rate among 85 large metros.

At the onset of the millennium, house flippers—people who purchased imperfect homes, renovated them, and resold them at a profit mere months later—ran rampant in U.S. housing markets. 

When the market went bust, the flippers mostly went away, replaced by investors who bought distressed homes and rented them out. The practice of flipping homes has been slow to return—5 percent of all home sales in the past year were flips 1 The survey defined a flipped property as one that was purchased at market rate and resold within 12 months at a higher price; it excluded homes sold at discounted rates because of a distressed sale. , according to a report published today by Trulia, down from 8.6 percent in 2006. There's one major metropolitan area, however, where flipping is making a steady comeback: Las Vegas.


In the third quarter of 2015, flips accounted for 10.4 percent of homes sales in the Las Vegas metropolitan area, the highest rate among the 85 metros included in the report. That's down from a peak flip rate of 13.1 percent in the third quarter of 2005. Las Vegas and Birmingham, Ala., are the only two metropolitan areas where the flip rate has recovered to 80 percent of the 15-year peak. (An October report from RealtyTrac put Las Vegas's flip rate at 8.7 percent in the third quarter of 2015, behind Memphis and other major markets.)

The peak time and place for flips was Miami during the third quarter of 2005, according to Trulia, when 20.5 homes were resold inside 12 months of the previous purchase. Miami had only a 6.4 percent rate in the third quarter of 2015. 


Why are Vegas investors rolling the dice? The median price for existing homes in Southern Nevada was $219,000 in January, according to the Greater Las Vegas Association of Realtors, and the relatively low home prices may be appealing to investors.

But home values don't seem to be rising quickly enough to create a ripe market for flippers, said Ed Coulson, director of the Lied Institute for Real Estate Studies at the University of Nevada, Las Vegas. (Median prices in January were up 9.5 percent from the year before, according to GLVAR.) “I don’t think that people come into this market thinking they’re going to be coming in for three months and turn a 20 percent profit,” Coulson. “No one thinks that’s going to happen again.”

Las Vegas’s rising flip rate isn’t necessarily a bad sign, said Ralph McLaughlin, chief economist at Trulia. If the resales are driven by investors who see an opportunity to buy homes and make repairs neglected during the recession, the activity could be a good thing. If investors are simply speculating that underlying home values are going to rise, that could be a troubling sign of an overheating market. “The fact that there’s been a steady increase since 2008, it’s not a red flag, but maybe a yellow flag,” McLaughlin said.

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