Home flipping takes a plunge in Colorado and Denver in 3rd quarter
Home flipping in Colorado and Denver took a plunge in the third quarter of 2014, with 13 percent fewer houses being bought, fixed and quickly resold than in the third quarter of 2013.
Profits also slipped, with the average gross take on a flipped house statewide dropping to $54,399 from $63,085 in third quarter of 2013.
RealtyTrac, which released a report Tuesday, blamed the decline on the scarcity of distressed homes that can be bought at a discount and rehabbed for a profit.
Quarter over quarter, Coloradans flipped 18 percent fewer homes than in the second quarter and Denverites flipped 26 percent fewer homes from the second quarter to the third quarter, according to a report issued by RealtyTrac Tuesday.
The average gross profit for flipped Denver homes dropped to $67,508 from $75,348 in the third quarter of 2013.
“The practice of flipping has become much more difficult,” said Rick Koentopp, a real estate agent for Re/Max Alliance, covering the Denver market.
“With an extremely active market, the inventory of candidates has dwindled. The appetite to do the flips is very strong, but it is harder to identify the properties, Many flippers have to potentially accept lower margins, which increases the risk that is involved.”
Flipping nationwide hit its lowest level since the second quarter of 2009, RealtyTrac reported.
Nationwide, flippers reported a gross profit — not including rehab costs and other expenses — of $75,900, or about 36 percent return on investment, RealtyTrac vice president Daren Blomquist said. Investors reported 35 percent return on investment in the second quarter and 37 percent in third quarter of 2013.
In Colorado, 928 homes were flipped in the third quarter of 2014 and 538 homes were flipped in metro Denver, compared with 56 homes in Fort Collins-Loveland, 74 in Greeley and 115 in Colorado Springs.
Even in a city such as Greeley, which is experiencing an energy boom, the flipping average gross profit in the third quarter was $38,627, down from $46,331 in the third quarter of 2013.
In Colorado Springs, average gross profit dropped to $38,627 from $45,575 in the third quarter of 2013.
Howard Pankratz: 303-954-1939 or firstname.lastname@example.org