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    Phoenix Arizona Housing Market: Prices | Trends | Forecast 2021-2022

    Phoenix has been one of the hottest real estate markets in the U.S. The Greater Phoenix housing market is extremely strong this year. It is a metropolitan area, centered on the city of Phoenix, which includes much of the central part of Arizona. The Phoenix real estate market has not only recovered after a slump due to COVID-19 but the demand has reached new heights.

    According to Zillow, among the nation’s largest markets, annual appreciation was the second-fastest in August 2021 in Phoenix (31.8%). Only Austin, Texas, with 44.8 percent, beats Phoenix. The annual rental growth in Phoenix was 24.8%. Year over year, the Greater Phoenix’s for-sale inventory is down 12 percent, according to Zillow’s statistics. More inventory is anticipated to become available in the coming months.According to Zillow’s home value index, typical property values in Phoenix-Mesa-Scottsdale Metro grew by over 31.9% from Aug 2020 to Aug 2021, compared to only 10.5% the previous year and 5.3% from Aug 2018 to Aug 2019. Phoenix-area home prices are forecasted to continue to rise at a brisk pace over the next twelve months. The supply of active listings stands at an all-time low. It would take about a month for the current inventory of homes on the Phoenix housing market to sell given the current sales pace.

    A panel of Zillow’s economists and real estate experts expect that Phoenix will be America’s second-hottest housing market in 2021. Austin, Texas heads a lineup of sunny and relatively affordable metro areas — Phoenix, Nashville, Tampa, and Denver — that are most likely to outperform the nation in home value growth in 2021. The top-five metros are all relatively affordable options compared to expensive coastal areas that have led to home appreciation ranks in recent years.

    According to the Arizona Regional Multiple Listing Service, the median sales price in the Phoenix region was $405,900 in August 2021, up 24.6 percent from the previous year. It is $80,000 more than last August’s median price. But it’s more than $100,000 below the median home prices in San Francisco, Los Angeles, Seattle, Portland, and Denver. From those perspectives, Phoenix’s housing prices remain relatively modest.

    According to Redfin, the Phoenix housing market is very competitive.

    • In August 2021, Phoenix home prices were up 23.8% compared to last year, selling for a median price of $390K.
    • On average, homes in Phoenix sell after 25 days on the market compared to 33 days last year.
    • There were 2,357 homes sold in August this year, down from 2,397 last year.
    • The average homes sell for about 2% above list price and go under contract in around 24 days.
    • Hot listings can sell for about 5% above list price and go pending in around just 8 days.
    • Over fifty percent (51.9%) of homes were sold above their original asking prices, which is 59.6% more that last year.
    • About 13% of the listed homes were sold with price drops. The sale-to-list-price ration was 101.3%.

    According to Redfin’s date, a third of all home purchases in Greater Phoenix this spring were purchased with cash, a more than the 6-percentage-point increase from the previous year. It indicates that investors are increasingly buying properties, which is not a piece of good news for the first-time buyers in this region. According to their migration statistics, over a quarter of Phoenix’s prospective out-of-state buyers came from Los Angeles. Another 17% were residents of Seattle.

    Phoenix is the seat of Maricopa County and the largest city in the state. According to Realtor.com, in August 2021, the median list price of homes in Maricopa County was $435K, trending up 11.6% year-over-year. The median listing price per square foot was $416. The median sale price was $416K. It is a seller’s market with a Sale-to-List Price Ratio of 100.04%. There’s more demand for homes than there is supply, and it’s what we see in most real estate markets today.

    • Paradise Valley has a median listing price of $2.8M, making it the most expensive city in Maricopa County.
    • Sun City is the most affordable city, with a median listing price of $275K.
    • Phoenix city has a median listing price of $405K.
    • Arcadia has a median listing price of $1.2M, making it the most expensive neighborhood in Phoenix.
    • Maryvale is the most affordable neighborhood in Phoenix, with a median listing price of $305.5K.

    The pandemic could only pause sales, which in turn created a huge pent-up demand. As we saw Arizona real estate market thriving & becoming sizzling hot in the past couple of years, even the rise in mortgage rates was believed not to affect it. Low interest rates are helping boost but the inventory is sparse. High demand and low inventory have increased prices, which is a piece of good news if you plan on selling.

    As per the current trends, the Phoenix is all set to remain a seller’s market in the next 12 months. The prediction is that the upward price trend will continue for the near and medium-term, making any price reductions in 2021 rather unlikely. From April 2011 to April 2021, Phoenix home prices have seen an appreciation rate of 237.84% based on the median sales price, according to ARMLS.

    Arizona Housing Market Trends 2021

    If you are considering moving to Arizona, Scottsdale, Phoenix, and Tucson are some of the top places to call home. According to Zillow Home Value Index (ZHVI), since Oct 2011, Arizona housing prices have gone up nearly 174%. ZHVI is not the median price of homes that are sold in a month within a geographic region. It is calculated by taking all estimated home values for a given region and month (Also called Zestimates), taking a median of those values, applying some adjustments to account for seasonality or errors in individual home estimates. It, therefore, represents the whole housing stock and not just the homes that list or sell in a given month.

    By this calculation, the current typical home value of homes in Arizona is $376,369. It indicates that 50 percent of all housing stock in the area is worth more than $376,369 and 50 percent is worth less (adjusting for seasonal fluctuations and only includes the middle price tier of homes). In July 2020, the typical value of homes in Arizona was around $284,000.

    Arizona home values have gone up 30.7% over the past year and most likely they will continue to rise at a similar rate (double-digit appreciation) over the next twelve months. This also raises a bit of a concern that in Arizona wages are not keeping up with the rising costs of housing. When prices go up, some buyers can no longer afford to buy and drop out. The faster that pricing goes up, the more buyers tend to drop out, at least in a healthy market.

    Arizona Housing Market
    Source: Zillow.com

    Arizona’s housing market has over 900,000 renter households, accounting for 36% of the total number of households. According to a report from the National Low Income Housing Coalition (NLIHC), the rental prices in Arizona have become out of reach for many residents. For too many low-income workers, wages have not kept pace with rising rents and home prices. Workers need to make $21.10 an hour to afford a 2-bedroom rental at a fair-market rate.

    In Arizona, the Fair Market Rent (FMR) for a two-bedroom apartment is $1,097. To afford this level of rent and utilities — without paying more than 30% of income on housing — a household must earn $3,658 monthly or $43,892 annually. Assuming a 40-hour workweek, 52 weeks per year, this level of income translates into an hourly Housing Wage of $21.10.

    The minimum wage in Arizona is $12.00/hr and the Average Renter Wage is $17.46. Cost-burdened is defined as spending more than 30% of one’s monthly income on housing and utilities. Neighborhoods in west and South Phoenix are most cost-burdened. In some cases, more than 50% of households are paying 30% or more of their income on housing costs, while less than 29% of renting households are housing cost-burdened in the north.

    Flagstaff MSA is the most expensive MSA where you need an hourly wage of $24.35 to afford a 2-bedroom rental. The second most expensive is MSA is Phoenix-Mesa-Scottsdale, where you need an hourly wage of $22.56 to afford a 2-bedroom rental.

    Arizona Housing Affordability
    Source: The National Low Income Housing Coalition

    Between 2010 and 2018, the City of Phoenix’s median income increased by only 10%, while, median rent increased by over 28%, and the median home price increased by over 57% during this time. In 2018, half of Phoenix renters were considered housing-cost burdened, 25% of homeowners were housing-cost burdened and altogether 36% of the entire population is housing-cost burdened. According to a report by Phoenix.gov, 65 % of households that fall within or below the moderate-income range would require some amount of subsidy to achieve housing that is considered affordable at their income level.

    Here’s the current overview of the Arizona home prices by counties (source: Realtor.com)

    Arizona CountiesMedian Listing Price$/SqFt
    Maricopa County$435K$244
    Pima County$309.9K$188
    Yavapai County$340K$256
    Pinal County$329.9K$192
    Mohave County$185K$181
    Coconino County$399K$303
    Navajo County$239K$215
    Gila County$300K$231
    Yuma County$229.9K$163
    Cochise County$185K$140

    Phoenix Housing Market Forecast 2021-2022 (Latest Predictions)

    What could be the Phoenix real estate market predictions for 2021 & 2022? Phoenix is the 5th largest city in the country and continues to grow. New residents are drawn to Phoenix by its strong economy, relatively low cost of living, high quality of life, economic opportunity, and cultural attractions. Since 2000, Phoenix’s population has grown by 20% to included approximately 555,013 households and 1.6 million people.

    It is the biggest city in Arizona and the state’s capital. It is a minimally walkable city in Maricopa County with a population of approximately 1,442,530 people. However, Phoenix itself is massive. It is the only state capital with more than a million people. It is the fifth-largest city in the country. The Phoenix housing market is much larger than Phoenix itself – it encompasses the entire Valley of the Sun, Phoenix’s sprawling suburbs that are home to another five million people. That makes the Phoenix metro area the twelfth largest in the country.

    The favorable living conditions have, furthermore, comforted real estate investors and buyers to invest in Arizona real estate market. The Phoenix housing market was a headline in the news a decade ago when the housing crisis of 2007 and 2008 caused home values here to fall by as much as half. The slow recovery of the national housing market has taken a decade.

    Since 2006, the population has grown faster than housing. This growth fueled by job growth has finally consumed the glut of re-sale housing created during the bubble years. Now the market is facing a shortage of homes for sale. Phoenix home prices were up by roughly 7% over the last twelve months. Despite the increase in property prices, the Phoenix real estate market remains much more affordable than other places.

    Single-family homes continue to drive the Arizona real estate market. In 2019, single-family homes grew by roughly 4% as compared to 2018. Particularly, previously-owned single-family houses compromise the majority of residential sales in the Arizona real estate market- approximately 80% of all sales. Annually, the number of previously-owned single-family homes is three to four times greater than new single-family home sales.

    The Phoenix real estate market is of the top-performing, not only in the Arizona real estate market but nationwide as well. Phoenix has a mixture of owner-occupied and renter-occupied housing units for sale. According to Neigborhoodscout.com, a national real estate data provider, three and four-bedroom single-family detached are the most common housing units in Phoenix. Other types of housing that are prevalent in Phoenix include large apartment complexes, duplexes, rowhouses, and homes converted to apartments. Single-family homes account for about 60% of Phoenix’s housing units.

    Since Oct 2011, housing prices in the Phoenix metro have appreciated by nearly 199% (ZILLOW HOME VALUE INDEX). Phoenix’s housing market started so strong in 2020 that only something as drastic as the ongoing pandemic could have impeded the real estate sector. The year 2020 started with an extreme shortage of houses for sale, and an increasing number of sales over the asking price of property owners.

    The current typical home value of homes in the Phoenix-Mesa-Scottsdale Metro is $401,673. It indicates that 50 percent of all housing stock in the area is worth more than $401,673 and 50 percent is worth less (adjusting for seasonal fluctuations and only includes the middle price tier of homes). In Sep 2020, the typical value of homes in Phoenix was around $310,000. Home values have gone up 31.8% over the past year alone. The Zillow Buyer-Seller Index considers Phoenix a sizzling hot seller’s real estate market.

    Phoenix Housing Price Forecast 2022
    Source: Zillow

    Similar growth has been recorded by NeighborhoodScout.com as their data also shows that in the past ten years, Phoenix real estate appreciated by 238.38%. This amounts to an annual real estate appreciation of nearly 12.96%, which puts Phoenix in the top 10% nationally for real estate appreciation.

    During the latest twelve months, Phoenix’s appreciation rate has been 17.05%, which is higher than appreciation rates in 98.27% of the cities and towns in the nation. In the latest quarter, the appreciation rate has been 5.48%, which annualizes to a rate of 23.81%. This figure also corroborates Zillow’s positive forecast of +20%. It tells us that home prices in this region are expected to continue their growth in 2021 in double-digits. First-time home buyers will remain a strong force while younger Gen-Z buyers are expected to play a growing role in this housing market.

    Here is the latest housing forecast for Phoenix, Metro Phoneix, and Maricopa County until April of 2022. There’s good profit potential for the period of one year if you are looking for homes for sale with good flipping profit. It can be a profitable property investment opportunity if you can find a good deal. A long-term investment in Phoenix real estate will yield even greater profits.

    • Phoenix-Mesa-Scottsdale Metro home values have gone up 31.8% over the past year and Zillow predicts they will rise 21.7% in the next twelve months.
    • In the city of Phoenix, home values have gone up 32.1% over the past year and will continue to rise in the next twelve months.
    • Maricopa County home values have gone up 31.5% over the past year and will continue to rise in the next twelve months.
    • Mesa home values have gone up 31.4% over the past year and will continue to rise in the next twelve months.
    • Scottsdale home values have gone up 31.7% over the past year and will continue to rise in the next twelve months

    The chart below, created by Zillow, shows the growth of median home values since 2011 and their forecast until Aug 2022. 

    Phoenix Housing Market Forecast
    Screenshot courtesy of Zillow.com

    The first chart show below (by ARMLS) shows year-over-year appreciation for each of the last 20 years of reported data for April. The chart depicts the year-over-year changes in the average sales price as well as the year-over-year change in the median sales price. The average sales price increased 17 out of 20 years while the median sales price increased 16 out of 20 years. The largest year-over-year increases took place in 2005 with the largest decline occurring in 2009. The median sales price rose 41.94% in 2005 and fell over 45% in 2009. In 2007, the year-over-year average price rose slightly while the median moved slightly downward.

    Phoenix Real Estate Appreciation Trends
    Source: Year-Over-Year AVG/MED Origination & Appreciation % for April via ARMLS

    By comparing the reported average and median sale prices for each year to the 2021 metrics, we can see the percentage change in prices based on the year the home was purchased. Anyone who purchased a home in April 2011 has seen an appreciation rate based on the median sales price of 237.84%. The lowest appreciation applies to buyers purchasing at the peak of the market in 2006. Their current appreciation is
    47.06%.

    Phoenix Housing Price Growth
    Source: AVG & MED Origination & Appreciation % in April via ARMLS

    These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? It is quite evident that the ongoing pandemic has not had any major impact on Phoenix’s housing market. However, it was quite expected that social distancing, higher unemployment, and lower overall economic activity would constrain real estate activity in the near term. And it did happen from May 2020 onwards. The shutdown has already resulted in 546,900 unemployment filings.

    At the same time, the industry is adapting to the current environment by conducting business using technologies such as virtual showings and e-signing to help buyers and sellers with their housing needs in the face of these challenges. COVID-19’s impact on the Phoenix housing market was not that extreme. The Metro Phoenix housing market is extremely strong and has been hitting several new records in the last few months.

    What does it mean for homebuyers in Phoenix? The biggest mistake buyers make is sitting around waiting for sale prices to decline while their potential mortgage payment plummets. Mortgage rates have been on an upward journey for the past four weeks, and they continue into the below 3% range as we write this. The average rate on a 30-year fixed-rate mortgage was 2.84% in August. This is the time for buyers to take advantage before they are increased again. Properties purchased today are expected to strongly appreciate by more than 20% over the next 12 months.

    We have already discussed above the latest housing market report for the Phoenix area. It shows no sign of cooling off in 2021. The entire Greater Phoenix area is breaking records over records in sales prices. The start of 2020 was like a nightmare for regular homebuyers of Phoenix due to tight inventory and an increasing rate of price appreciation. It’s still a seller’s real estate market in Phoenix. The Phoenix entire metro housing market is experiencing moderately strong demand but the supply of resale homes is so poor it crashes below record lows almost every week.

    In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, Phoenix can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s not going to happen. We can conclude that demand has not only recovered from the COVID-19 pandemic but has reached heights that make it very strong by any historical standard. Hence, Phoenix real estate market remains strong and skewed to sellers, due to a persistent imbalance in supply and demand.

    Real estate market forecasts given in this article are just an educated guess and should not be considered financial advice. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control. Many variables could potentially impact the value of a home in Phoenix in 2021 (or any other market) such as big changes in the distressed, new-construction, or luxury home segments. There are also a wide variety of economic and political factors that can and do impact real estate markets. Most of these variables are difficult to predict in advance. 

    Phoenix Real Estate Investment: Should You Invest in Phoenix?

    Should you consider Phoenix real estate investment? Many real estate investors have asked themselves if buying a property in Phoenix is a good investment? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2020. If you are looking to make a profit, you don’t want to buy the most expensive property on the Phoenix real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, an investment property in Phoenix that you might move into or sell at retirement in the future. Either way, knowing your profit potential and purpose is the first thing to consider.

    Top Reasons To Invest In The Phoenix Real Estate Market
    There are several other reasons to consider investing in Phoenix real estate. Phoenix’s housing market has been one of the highest appreciating communities not only in Arizona but in the nation as well. Its more reasonably priced housing, lower cost of living, available workforce, and stable climate forecast a growing economy and stronger housing growth. Prices are up 17.8% since two years ago and 145% since prices bottomed out in May 2011.On the other hand, Phoenix home prices are now only back to where they were at the top of the real estate bubble in 2006, 12 years ago. If you take into account inflation, however, Phoenix home prices are still 20% below the inflation-adjusted peak in 2005.Current trends fairly predict that the Phoenix home prices and real estate appreciation rates in 2020 are very likely to be the same as in the past year. In the latest quarter, Phoenix’s real estate appreciation rate was at 5.48%, which equates to an annual appreciation rate of 23.8%.The national economy is super strong and the number of people moving into Phoenix is finally strong again after tanking during the Great Recession. Job growth has been vigorous for the past few years while single-family building permit activity has been relatively modest. Phoenix is becoming a top destination for people living in high-cost areas like Los Angeles & Seattle.

    Let’s take a look at the number of positive things going on in the Phoenix real estate market which can help investors who are keen to buy an investment property in this city. We’ll address the biggest factor pulling people to the Phoenix housing market next.

    Relatively Affordable Real Estate Market

    While California and Florida are seen as hot real estate markets, one of the major attractions of the Phoenix real estate market is affordable real estate. During 2018 and 2019, Arizona was one of the top three states in the nation for population growth. Only Texas and Florida outpaced it, in terms of year-over-year growth. Population growth is particularly high within the Phoenix metro area. Homes in the Phoenix housing market are approaching the 2006 record. Home-price appreciation appears to be slowing a bit in the Phoenix area and most experts agree that prices will continue to climb for the foreseeable future.

    According to the U.S. Census Bureau data, the population for the city of Phoenix rose by nearly 15% from 2010 to 2019. That’s well above the nation’s growth rate for that same timeframe. Population growth increases the demand for housing on both the purchase and rental sides. With all other things being equal, steady population growth tends to put upward pressure on home prices. The median home’s value has crossed $300,000 but that’s still cheaper than a starter home in coastal California. Don’t forget that the large retiree market means there is strong demand for one and two-bedroom houses and condos here, and those units are a fraction of the cost of a three-bedroom home.

    High Rate of Appreciation Due To Short Supply

    Although Phoenix has experienced consistent population growth, the housing market has not grown at the same rate. An Up for Growth study found that between 2000 and 2015 Arizona underproduced 505,134 housing units. This underproduction has caused a housing shortage in Phoenix. For example, in the last 30 years Phoenix produced approximately 220,000 new housing units, however, the population has grown by 820,000 people. Phoenix’s housing production has not kept pace with population growth.

    This underproduction was magnified when construction virtually shut down during the recession of 2008. Since that time, construction has slowly increased but has not reached the level of production achieved before the recession. The current shortages of housing supply, relative to demand, are a primary reason housing costs are increasing. A significant increase in housing supply is necessary to keep pace with current and projected housing demand.

    Highest Appreciating Phoenix Neighborhoods Since 2000 (List by Neighborhoodscout)

    1. N 14th St / E Fillmore St
    2. E Indian School Rd / N 50th Pl
    3. N 20th St / E Turney Ave
    4. N 7th St / E Mckinley St
    5. N 40th St / E Glenrosa Ave
    6. E Camelback Rd / N 56th St
    7. E Camelback Rd / N 32nd Pl
    8. N 32nd St / E Flower St
    9. N 24th St / E Indian School Rd
    10. Country Club Trailer Grove

    The Growing Phoenix Rental Market

    There is always going to be high tenant turnover in student housing markets. The presence of universities also influences local home prices and rents. The capital of any state will be home to its flagship university, and Phoenix is no exception. Phoenix is so large that it doesn’t just host the flagship Arizona State University campus in Tempe. There are secondary campuses in downtown Phoenix, northwest Phoenix, and neighboring Glendale. These schools alone have more than seventy thousand students. The Arizona Summit Law School, Grand Canyon University, and several others are located here. There are easily 100,000 college students renting in the Phoenix housing market. You could invest in large single-family homes or multi-unit buildings to rent to students at any of these campuses.

    Phoenix Rental Trends: 36% of the households in Phoenix are renter-occupied while 64% are owner-occupied. The rents are rising and it makes sense to keep your home and rent it out. In some neighborhoods, the average rental home may rent well over $2,500 a month.

    As of October 1, 2021, the average rent for a 1-bedroom apartment in Phoenix, AZ is currently $1,250. This is a 22% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Phoenix increased by 2% to $1,050. The average rent for a 1-bedroom apartment increased by 4% to $1,250, and the average rent for a 2-bedroom apartment decreased by -2% to $1,513.

    • Two-bedroom apartment rents average $1,513 (a 19% increase from last year).
    • Three-bedroom apartment rents average $2,150 (a 21% increase from last year).
    • Four-bedroom apartment rents average $2,400 (an 18% increase from last year).

    The “Zumper Phoenix Metro Area Report” analyzed active listings in August 2021 across 13 metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Arizona one bedroom median rent was $1,229 last month. Fountain Hills was the most expensive city with one bedrooms priced at $1,800 while Glendale ranked as the most affordable city with one bedrooms priced at $1,030.

    The best place to buy rental property is about finding growing markets. Cities like Surprise and Glendale are good for investors looking to get started with rental property ownership at an affordable price. These trends provide a macro look at the growing rental demand. Each real estate market has its own unique supply-demand dynamics with unique neighborhoods that present their own opportunities for investors.

    These cities look good for rental property investment this year as rents are growing over there.

    The Fastest Growing Cities For Rents in Phoenix Metro Area (Y/Y%)

    • Lake Havasu City had the fastest growing rent, up 25% since this time last year.
    • Gilbert saw rent climb 24.6%, making it second.
    • Glendale was third with rent jumping 24.1%.

    The Fastest Growing Cities For Rents in Phoenix Metro Area (M/M%)

    • Fountain Hills & Phoenix rents had the largest monthly growth rates, both up 5.3%.
    • Gilbert rent increased 5.2% last month, making it the second fastest growing.
    • Prescott was third with rent climbing 5%.

    These are some of the most affordable neighborhoods where the rent prices are way below the average Phoenix rent.

    • Garfield, where the average rent goes for $665/month.
    • Papago Vista, where renters pay $690/mo on average.
    • La Mancha, where the average rent goes for $695/mo.
    Phoenix Rental Market Trends
    Source: Zumper.com

    Phoenix’s Growing Short-Term Rentals

    There are more than 200 golf courses in Arizona, but most are located in and around the Valley of the Sun. There are several sports teams located in Phoenix and a wealth of tourist attractions. What makes Arizona unusual is the state’s open relationship with rental sites like Airbnb. A law that went into effect in 2016 made Arizona a leader in Airbnb rentals. The sites are required to collect taxes on the rentals, simplifying revenue collection for the state and the landlords. That probably explains why Airbnb guests grew by 150% in 2016 alone. The Airbnb market has exploded in Arizona during the past five years.

    In late 2014, Phoenix only had 687 properties for rent listed on Airbnb. By March of 2019, that number had grown to 4,224 listed properties. This makes Phoenix a great place to buy a single-family home or condo to rent out to tourists (as a short-term rental). However, there are some restrictions on short-term rentals. In May 2019, the state government passed a bill allowing for more regulations of short-term rental operators in the state of Arizona.

    In the bill, municipalities were allowed to restrict rentals to overnight stays and prohibit events that otherwise would require a permit, like weddings. Under the new law, owners of short-term rentals should have a sales tax license and they must list the sales tax license number on any advertisements (online/offline) for the property. Although, Phoenix’s short-term rental industry was hit hard by the COVID-19 pandemic the industry has shown resilience with relatively fair returns as owners implement safety measures to curb the spread of the virus and encourage guests to feel safe.

    Phoenix is Landlord Friendly

    If you want to invest in real estate, you typically want to do so in a market where you can quickly evict people who don’t pay their rent or damage property. You’ll be glad to know that the Phoenix real estate market is among these compared to surrounding states. Arizona, unlike California, allows landlords to serve an unconditional quit notice. If the tenant violates the rental agreement or doesn’t pay rent, they can be evicted quickly. Renter-friendly rules like requiring a landlord to return a rental deposit within two weeks are not a burden. Conversely, laws that say you can evict a tenant within ten days for lying on a rental application are a definite plus.

    The Massive Snowbird Market

    The snowbird movement is somewhat different than the conventional tourist market. Arizona has long attracted retirees who couldn’t afford Florida or wanted a cleaner, allergy-free air that never included storm clouds. Quartzite, Arizona in particular draws two million snowbirds and tourists. The city stands out for its sixty-plus RV parks. An estimated 300,000 people stay all winter before returning home. Some own second homes in Arizona communities restricted to active adults, while others stay in trailer parks. This creates an unusually diverse opportunity for those considering investing in the Phoenix real estate market.

    Growing Retiree Market

    The same things attract many people to Phoenix as snowbirds cause many to retire here permanently. This means that many snowbirds end up staying permanently in the Phoenix housing market. Sun City stands out as a mecca for seasonal and year-round retirees, but it is far from the only retirement community in the Phoenix real estate market. The aging of the U.S. population makes investing in communities catering to older adults an excellent idea. Suppose you buy a house to renovate and rent out. Phoenix deals with a large retiree population, both permanent and seasonal.

    To accommodate aging in place, they’ve loosened the rules on building “accessory dwelling units”, commonly known as mother-in-law suites. The city also recognizes the need for affordable housing, and they allow people to build and rent out ADUs as affordable housing, especially if the property is within walking distance of public transit. Buy a house, rehab it, and build a granny flat, and you have two rental properties for not much more than the price of one. And the city is almost certain to approve it because they want denser development.

    Low Taxes in Arizona

    Kiplinger listed Arizona as the 8th most tax-friendly state in the U.S. in 2018. The state income tax is 2.59% for low-income earners, 4.54% for wealthier families. The median home is worth around $177,000 and came with a property tax bill of around $1400, well below what you’d pay in Texas. Arizona has been lowering its capital gains tax rate, as well. The state has a relatively low transfer tax on deeds or land contracts, too.

    The Major Wave of Renovation in Downtown Phoenix

    The section of Phoenix wedged between Seventh Street and Seventh Avenue is undergoing a wave of commercial redevelopment, fueled by more than five billion dollars invested to date. High-rise developments and mixed-use projects have been built, and several more are underway. Public transit in this area is significantly improved. That is making this area and neighborhoods bordering it an excellent place to invest in the Phoenix housing market. Phoenix isn’t just redeveloping downtown to create a dense, walkable urban core. It is cultivating fifteen complete walkable communities across the metro area with strong public transit, denser housing, and locally provided services. This is a radical shift from the suburban sprawl the area has long been known for.

    Phoenix, Arizona Real Estate Investment Markets

    Investing in Phoenix’s real estate can be a worthy investment due to a steady rate of appreciation. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. The Phoenix housing market is one of the hottest markets for 2020. Don’t let memories of the Great Recession bust that cut home values in the Phoenix housing market keep you away. There are plenty of reasons to invest in the Phoenix real estate market, only ten of which we’ve provided above. Have a look at the Phoenix real estate investment prospects we have provided from various real estate sources and make the best possible decision for yourself.

    Good cash flow from Phoenix investment properties means the investment is, needless to say, profitable. The three most important factors when buying real estate anywhere are location, location, and location. The location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Phoenix investment property and you should be able to get a good return on your investment over the long term. The neighborhoods in Phoenix must be safe to live in and should have a low crime rate.

    The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. A cheaper neighborhood in Phoenix might not be the best place to live in. A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. Some of the popular neighborhoods for buying a house or an investment property in Phoenix are Vistancia, Laveen, Deer Valley, South Mountain, Biltmore, DC Ranch, Arcadia, McDowell Mountain Ranch, Anthem, North Scottsdale, Cave Creek, Old Town, Litchfield Park, Trilogy at Vistancia and North Phoenix.

    Phoenix real estate prices are well above average cost compared to national prices. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals such as duplex and triplex in Class A neighborhoods. The inventory is low, but opportunities are there.

    Even as Phoenix home prices have reached new heights, the market remains attractive to residential real estate investors. As they continue to compete for potential investment properties at the lower end of the market, the challenges for first-time homebuyers will remain. The homebuyers won’t be able to outbid real estate investors and would end up renting. As with any real estate purchase, act wisely. Evaluate the specifics of the Phoenix housing market at the time you intend to purchase. These prices are from Realtor.com and can vary from time to time.

    The super-hot housing market in Arizona has many other places for real estate investment. The Tucson real estate market is good for investment. Tucson like Phoenix sees a massive influx of snowbirds, retirees who flock here during the winter. That creates a large, seasonal rental market. The need for many retirees to sell their second homes when they can no longer travel or live independently provides an opportunity to snap up properties at a bargain rate. Better yet, a large number of those properties don’t have a mortgage on them. Other snowbirds sell their condo and move into single-family homes when they decide to stay in Tucson year-round.

    Similarly, Scottsdale has a track record of being one of the best long-term real estate investments in the nation if you are an investor. The area contains a mix of families, young professionals, and retirees. There are several reasons to consider investing in Scottsdale real estate. You’ll see better than average returns on the average Scottsdale real estate investment property, and its value will be bolstered by a variety of factors. The Scottsdale housing market has a more diverse rental market than just catering to those who can’t afford to buy a single-family home. For example, the area is famous for its snowbirds, retirees who come for the winter before returning home. This makes Scottsdale a good place for real estate investing.

    Chandler is bordered by the cities Tempe, Mesa, and Phoenix. It is home to about a quarter-million people. There are not suburbs to Chandler, because it is a suburb of Phoenix surrounded by other cities of similar size. However, Chandler has several points in its favor that make it a better choice for real estate investors than surrounding cities. The Chandler area offers strong market fundamentals in addition to a favorable tax and regulatory climate. This is in addition to a plethora of high-paying jobs that attract new residents and niche markets that are willing to pay higher rents in exchange for convenience and proximity to amenities.

    Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

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