Las Vegas real estate flips at 9.2 percent, down from ‘04 high

Fewer people are flipping over Las Vegas real estate.

The percentage of people quickly buying and selling local homes for a fast profit in 2015 was about half of its boom-era high, according to a Wednesday report from a California research firm.

The share of homes flipped — or sold twice within a year — hovered at around 9 percent, down from nearly 18 percent 11 years ago, the study from RealtyTrac found.

Home flips matters because a high proportion of such sales can distort the housing economy, said Daren Blomquist, RealtyTrac’s senior vice president.

“If they’re too dominant a part of the market, they can push up home values more quickly than warranted and faster than the market can support,” Blomquist said. “In the short term, it’s good for sellers, but it’s unsustainable. It’s not driven by real fundamentals. It’s driven by speculation.”

Flipping can also crowd out buyers who want to purchase a home to live in, Blomquist said.

Today, there’s a lot less crowding-out.

Flips made up 9.2 percent of local closings in 2015, down from their 2004 high of 17.6 percent, RealtyTrac’s numbers showed. That rate was still good enough for No. 2, behind Memphis, at 11.1 percent, and tied with Fresno, Calif., and Tampa, Fla.

Among states, Nevada ranked No. 1, at 8.8 percent, though that was down from a record 15.6 percent in 2003.

Nationally, 5.5 percent of home closings were flips in 2015, down from a 2005 peak of 8.2 percent.

Still, considering where the Las Vegas market was, flips are at or near healthy levels, Blomquist said.

It’s hard to say what normal would be here, but flips were 6.3 percent of Southern Nevada’s home sales in 2000. Since then, they’ve averaged 9.8 percent, above a national average of 6.1 percent. And that may not be unusual.

“There’s a higher turnover among homeowners in Las Vegas. It’s not necessarily a place where people stay a long time,” Blomquist said. “Also, because it’s a market based on tourism, you have ebbs and flows in the economy that create opportunities for flippers.”

Local experts agreed that flips may have mostly stabilized at what’s likely to be a high normal.

“Given the transient nature of the Southern Nevada market, there’ll always be some level of investor interest in short-term ownership,” said Brian Gordon, a principal in local housing research firm SalesTraq.

What’s important, said Gordon, is that nontraditional sales, including foreclosures and short sales, make up a smaller share of the market than at any time since the downturn.

Traditional buyers — homeowners purchasing with mortgages — make up 83 percent of the market now, up from around 25 percent in 2012.

“Southern Nevada’s housing market is much more stable than it once was,” Gordon said.

That also goes for the flipping rate, which was virtually unchanged from 2014’s 9.1 percent.

That share should fall in coming months and years, but not by much, observers agreed.

That’s because profits are still strong, averaging $39,000 per home in 2015.

“Flippers are able to actually add value to the homes,” Blomquist said. “If you begin to see that narrowing, that would be a sign of a danger zone.”

And though too much flipping isn’t healthy, it wouldn’t help the market to see an immediate, steep falloff in fast-turn investments.

“When flippers retreat from the market, it can be a barometer of problems in the future,” Blomquist said. “It may indicate that they see signs of a downturn.”

Contact Jennifer Robison at jrobison@reviewjournal.com. Find @_JRobison on Twitter.