A new study from Highland Cabinetry shows Colorado is the second-best state for house flippers.

The study considered remodeling prices, high sales rates, and a return on investment of 20%.

It ranked Arizona first, and Colorado and Florida tied for second. Colorado offered fewer sales for more money, while Florida offered more sales for less. In Colorado, the average remodeling cost is $64,325, with an average home sale price of $548,602.

Home flipping profits dropped in 2023

In 2023, there were 308,922 flipped single-family homes and condos in the U.S., down 29.3% from 2022, according to research from ATTOM, a real estate data curator.

Flips accounted for 8.1% of all home sales. Gross profits on typical flips dropped to $66,000 nationwide, with a 27.5% return on investment.

“In 2023, the landscape for home flipping across the U.S. became increasingly challenging,” said Rob Barber, CEO at ATTOM. “Whether the overall market has soared or seen just modest gains in recent years, investors have missed out on the action.”

He attributed the sharp decline in home flips to a tight supply of homes for sale and dwindling returns.

In the Denver metro, rising interest rates in 2023 dampened investor interest in home purchases.

The higher rates combined withlong waits for building permitsmade buying and flipping homes less appealing, while the higher rates made renting investment properties less profitable.

“Those investors are finding other places to put that money,” Craig Harcek with 8z said in December. “In fact, we’re even seeing some investors divesting from their real estate portfolio and selling houses.”

Home flipping profits climb in first-quarter 2024

ATTOM’s first-quarter 2024 U.S. Home Flipping Report shows that 67,817 single-family homes and condominiums flipped nationally, representing 8.7 percent of all home sales.

That’s up from 7.7 percent of all home sales in the U.S. during 2023’s fourth quarter.

Meanwhile, gross profits on typical flips around the country increased to $72,375. That remained down from a high of about $80,000 in 2022. But it was up from $66,000 in 2023.

“The latest numbers show that investors still face an uphill climb to clear significant profits after expenses,” Barber said.

“They, like others, also face tenuous times amid a housing market boom that’s cooled down over the past year. But we now have a year’s worth of a trend showing that things have started to turn around for the flipping industry, with clear signs of increasing interest flowing into the market.”

The median resale price of flipped homes nationally in the first quarter of 2024 was $312,375, generating a gross profit of $72,375 above the median investor purchase price of $240,000.

The news and editorial staffs of The Denver Post had no role in this post’s preparation.