The real estate market has changed since the course of the recent COVID-19 pandemic. Buyers, sellers, and renters had to rethink their strategies with how the economic downturns played out over the last year. The state of Arizona is no exception–many investors have seen changes in the real estate market which will affect the years to come.
David Ebrahimzadeh, a successful real estate and private equity investor has been observing the Arizona property market for quite some time. He has seen patterns and changes that started in 2020, but these trends will continue in the years to come. In this post, Mr. Ebrahimzadeh shares the strategies one should consider when investing in the Arizona housing market.
1. Purchase demand in Phoenix has not gone down
For people looking to sell their homes in Phoenix, AZ, this is good news. The purchase demand has not died down, which means that sellers can close a deal at a higher price. Phoenix is still a booming metropolitan area and its living spaces are still in high buyer competition.
However, buyers may see this trend as a double-edged sword. They must be ready to set different expectations in terms of the valuation of homes in Phoenix. Although it is easy to assume that the overall housing market in the U.S. crashed, homes in Phoenix still continue to increase in median prices, which is at an additional 17.5% as of November 2020.
The great thing about this trend is that the value of homes in metropolitan Arizona areas won’t decrease in value whether you’re a buyer or seller.
2. Mortgage prices will increase
Just as the valuation of house selling prices in Arizona cities will increase, so will mortgage prices. People who earn passive income through rentals will enjoy these changes that took place in 2020 and beyond as the average rent will reportedly rise to 3.88%.
For those who want to invest in Arizona rental properties, it is best to look into the following factors:
Average rental price per location:
Observe the rental pricing of popular areas and calculate the average. This will give you a rough idea of how much you can get monthly if you do decide to invest.
Type of rental:
If you do plan to invest in rentals, it is important to consider the current situation brought about by the ongoing pandemic. It is not ideal to invest in multiple-room rentals at this poses the risk of virus spread and possibly low demand. Isolated vacation homes can be a good alternative or single-unit homes.
Renter market:
When choosing a home and location, it is also essential to look into the renter market. Are you picking a place where there’s a good influx of renters, such as students, families, or workers? This is a good sign.
The careful consideration of rental property factors above will determine the success of your mortgage income as an investor.
3. Changes in Airbnb regulations in Arizona
Airbnb recently released changes that affected property renters. Now, all Airbnb renters are required to put in their Tax ID or license, requiring every property to be registered in their respective cities.
This regulation helps in preventing scam offers on the website, which means that there will be a higher barrier of entry to become an Airbnb host. Due to these increased measures, Airbnb rates within Arizona locations may also turn higher–which means great news for hosts. Noncompliance to these regulations may cause a ban on the Airbnb host’s listing as well or other legal consequences.
4. No predicted market crashes in 2021 and beyond
Despite the looming economic downturns that 2020 brought, there will be no market crashes in the Arizona housing industry. All the previous signs pointed positively to the following key areas:
House value:
As previously mentioned, median pricing will increase ranging from $300,000 to $450,000 depending on the city in Arizona.
Seller’s market:
The high demand makes the seller gain the upper hand in setting a profitable price.
Urban developments:
Continued commerce in Arizona cities point to positive signs for investors as well.
5. Continued bidding competition for affordable homes
Another implication of the seller’s market in Arizona is bidding wars for affordable properties. If you are looking to bid for cheap homes, you may face a challenge in the current market. Since the prices will increase for most properties, those who are joining auctions to snag a good deal will face some strong competition.
At this point, it may be ideal to find a mid-range price for Arizona properties if you wish to escape the hassle of unsuccessful bidding attempts.
Knowledge is Power: Understanding Arizona Housing Power Trends
Truly, knowledge is power when it comes to understanding the real estate markets. Arizona at present seems like a great investment and all signs point to it, but it is still best to weigh in some considerations that are relevant to your needs.
