What Made Real Estate Investing In Phoenix So Attractive?

What Made Real Estate Investing In Phoenix So Attractive?

A lot of buzz has been made about the recovery in the Phoenix housing market.  From the beginning of 2011 to the end of 2012, median home prices have increased from roughly $140,000 to more than $215,000, or an estimated 54% increase over those two years.  While a number of large scale investors purchased much of the inventory during that period, the real questions relate to:

• What made real estate investing in Phoenix so attractive?
• Can we find other markets demonstrating similar characteristics?

As shown above, home prices cratered from 2006 through the end of 2010 on the order of 50% (depending which price index you use).  During this time frame, though, we take a look at several other pertinent components of real estate investing as well, including rental occupancy, market rent, and the change in interest rates to determine the leveraged cost of ownership and the point of inflection in which investors began putting much more money to work in the market.

Rental Occupancy

• From 2006-2010, rental occupancy dropped roughly 10%, from an average of about 91% in 2006/2007 to about 81% in late 2008 through 2009.  However, after spending about a year in the low 80% range, occupancy began to recover in 2010 to the mid 80% range and today has climbed back to its pre-crash level of 91%.

Market Rent

• During the same 2006-2010 period, market rent (as measured by HUD