Market Shift, Opportunities for AZ buyers & investors
The market has shifted from the frenzy of 2020 to the first quarter of this year. Historical data from the Cromford report, the most up-to-date and accurate source of market data available to real estate professionals, indicates that we are in a balanced market, but the reality of what we are seeing in the field is that the pendulum has swung in the favor of buyers for the first time in the past few years. This trend will likely continue well into the first quarter of 2023 and beyond, especially here in the greater Phoenix Metro area.
From early 2020 until the first quarter of this year we were hovering around 4,000 active residential listings in Maricopa County (greater Phoenix Metro). Compare this to the historical balanced market of $20k-25k listings. Based on these numbers it's no wonder there was an average year-over-year home value increase of around 30% during the frenzy period. Combined with the low interest rates, COVID changing the dynamic of work from home, and the shift in economic and political climates in certain high-population states, it became the perfect storm for a mass migration within the U.S.
As of the date of this post we are now at 20,017 residential listings valley wide. All of this to say the days of waiving appraisals, inspections, competing against 20 offers and paying 10-15% above fair market price are over. With the recent influx of inventory, we are already seeing rental prices drop, and will likely continue to see a decline in rental rates into the holiday season. The reason being, among other factors, there are now homes to buy, and you wont have to donate your left kidney to get an offer accepted! Rising interest rates are a concern for some, but the reality is much different once you consider certain factors. I will do a separate post on interest rates soon.
The long and short is that for the first time in more than two years, there are now massive opportunities for investors looking to acquire single family properties for long and short term rentals. The fix & Flip market is still lagging, but as home priced continue to level off, we will see better margins, but we aren't quite there yet. The wave has crested here in the Greater Phoenix Metro area, we are one of a few places in the United States that will continue to see growth and a steady increase in demand in the years and decades to come. Our political climate, location, tax structure are attracting businesses and young professionals and families alike. The weather is beautiful apart from a few months out of the year, there is plenty to do, and let's not forget the upcoming Super Bowl! Phoenix is the place to be, and will continue to grow in popularity over the coming years. I tell my clients daily.... "Imagine buying a house in Huntington Beach 20+ years ago!"
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Quote from @Jason L Shinn:
Our political climate, location, tax structure are attracting businesses and young professionals and families alike. The weather is beautiful apart from a few months out of the year
And don't forget the other parts of AZ, including just North of you where the weather is great 12 months a year. I know you are specific to the Phoenix market , but there are opportunities all over the state, I believe...
Absolutely right Bruce. Flagstaff, Sedona and Tucson in particular. I grew up in Sedona, you do get all four seasons in certain parts of AZ.
