Making an Investment in Arizona Real Estate Property


Arizona Real Estate Market
Arizona Real Estate Market

According to CoreLogic Inc., a consumer analytics company, home prices have increased to 6% all over the country as compared to last year.

And,as stated by the Tucson Association of Realtors, the average home price in Arizona is up by 5 % over the past year.

Now, deciding to invest in Arizona does not mean having questionable retirement plans any more. You will have something like a Florida West with sand rather than a swamp.

However, Phoenix and Tucson have considerably improved, giving buyers a variety of choices. Aside from the major cities, Flagstaff caters to younger demographic, Yuma has a large  population of immigrants, and Prescott has a lot of retirees. All these people have different housing requirements.

Last year, while the stock market has been practically flat, the prices for single-family homes have gone up by 5.3%.

Research indicates that stocks perform better and houses across the country appreciate at around the inflation rate for a long time. Then again, the averages nationwide is not that important to the real estate investor who is interested in a property in a particular local market.

Phoenix has the best economic growth, and has the strongest demand for real estate property. It is the place where work opportunities are doubled as compared to the national rate.

There are available jobs in retail, healthcare and in finance industry. Prescott also has a strong employment growth mostly in healthcare and retail industries, mainly because from the retiree population. Flagstaff highly depends on the cyclical tourist sector. On the other hand, Tucson has recently been slow-moving.

At this point, the multifamily market has stolen the scene for this year, as it draws in large investors and high record sales. When the national retailers began arriving to Tucson, it has led to the rise of new shops and the demolition of old stores in the core city.

Tucson has plenty of working professionals who are renting in the area. A lot of investors want those as the real estate markets have been packed with investors in apartments rentals, and Tucson is the right place for this.

Apparently, apartment properties is the king in the investment industry. It may be unheard of, but investors are aiming for profit in a low-return market, which is the ROI in the long run.

In all parts of Arizona, the home prices went up and dropped drastically in the boom and bust. Soon after, the rates in Phoenix and Prescott experienced a short period of strong economic growth in the foreclosed properties.

It seems like those have now been removed out of the system, in an effort to look at face value the current price increases. Basically, they are higher in Prescott, Phoenix and Flagstaff, while lower in Yuma and Tucson.

The housing rates in Phoenix increase at about 30% in the course of the next three years, and that means you should not waste time if you are planning to invest there. The selling prices have been the highest in Phoenix alone, while a bit lower in the southeast suburbs.

Phoenix, Tucson and Flagstaff have a large number of renters, roughly 32%, although buying single-family properties in Phoenix is the most feasible option for rent out, considering that the home prices in the other two are higher when compared with rental prices.

It is where the ratio is a lot more beneficial, and where housing needs promote dividing single-family houses into multiple rental flats. The considerably lower pay in the healthcare and retail industries will further develop the renting trade in the future years.

Mortgages are always a great investment. The equity cushion for new mortgage loans is likely to increase fast, since property prices will continue to increase in the years to come. Even so, the selling prices match with the local salaries, and so the danger of default remains average.

Investments in restaurants and retail stores are valuable in Phoenix due to the rapid growth of population. The suburbs in the Pinal County are underserved for both sectors.

In Flagstaff, such investments deal with tougher competition as well as the cyclicality of tourism. In Prescott, the retail market place has been flat and has decreased in Tucson. And in Phoenix, the big growth in healthcare and finance are likely to require more office space.

How fast will real estate property develop In Arizona? Well, not so.

Credit continues to be difficult and tight. The loan limit of FHA has been lowered to $271,000. Considering that the average FHA FICO rating is 682, and 744 for FNMA, lots of people are out from the market. The affluent retirees, the commission sales people and the self-employed are no longer eligible. In addition, another 1.5 million individuals are living with their parents compared to 2002.

Basically, student loan debt is considered the top reason for living with parents, and that has tripled during the last 10 years. Purchasing power is decreased by 54% for $250 each month in the student loan debt.34% of the people has student loan debt, and 35% of them pay off more than $250 every month. Therefore, paying money on student loan debt signifies not saving enough for houses.

Resale activity is preferable to new property, yet there won’t be any increase in all real estate markets until real estate recovers and more new houses are available for sale. And, even when there is a good balance from supply and demand, the trade is controlled by mortgage approvals.

The Numbers are Improving

During the first half of 2016, the listing prices for houses in Laveen and South Phoenix have increased from 10% to 16% in the following ZIP codes; 85339, 85040, 85041 and 85042. This results in low interest rates and affordable high-quality properties in the price range of $150,000 to $200,000.

The real estate markets in South Phoenix and Laveen are quite strong these days. Houses remain to be among the most cost-effective in the job centers of the Valley. The are also available less expensive houses, but they are farther from the Phoenix metropolitan area such as San Tan Valley, Casa Grande, Maricopa and Buckeye.

Moreover, the home interest rates for consumers with excellent credit ratings are only 3.0%. Investing in a property at that interest rate with 20% down on a 30-year- fixed mortgage loan will maintain monthly payments at approximately $900, which is lower than the rents for similar-sized houses.

Many people are approved for loans in the pricing range of $160,000 to $200,000, which makes the place preferable to buyers. Let’s say you are selling a house for $200,000, such properties are being purchased almost immediately.

With over 456 home listings sold within this year compared to the 437 houses sold last year, the closed sales have increased by 4.0%. The average selling price of $209,610 displayed a growth of 8.2% from last year to date. This year, the price range of $200,000 to $249,999 revealed one of the highest amounts of closed sales at 120 complete transactions.

Phoenix  85040 Real Estate

The YTD average active listing price displayed an increase of 12.0% in exactly the same time in 2015, which grows to $132,846. The houses that are sold escalated to 15.9% from 2015’s 164 to 190 by June 30, 2016.

85040 documented a total number of 276 active houses by June 30, 2016 within this year, and the $140,000 to $159,999 selling price category revealed one of the highest amounts of homes for sale at 48 listed units.

In this specific area of Phoenix, the average listing cost during the first half of 2016  was $125,612 as opposed to the $109,794 last year, which is a 14.4% increase. 46 days are the average on the property market as of June 30, a 6.1% decline from last year. This year, the listed homes on the average requires a shorter period on the market to sell.

Phoenix 85041 Real Estate

This specific area has an average active listing price of $212,913 year-to- date, with a rise of 16.2% from the average cost of $183,311 within the same time period last year. There were 709 active listed properties on the market over the 6-month time period, an increase of only 1% from the 708 of last year. The $160,000 to $179,999 price range revealed one of the highest amounts of homes for sale, having 157 listed units.

The closed sales have an average price of $182,817, a rise of 14.7% from the same time a year ago. The amount of sold home listings in 85041 reported a 2.2% progress in total, as compared to the same time period last year. This released a number of 402 houses sold, which is a year-over- year improvement of nine completed dealings.

Phoenix 85042 Real Estate

The specific area in Phoenix has an increase of 9.0% year-to- date listing price on the average, which is similar in the year 2015, growing to $236,851.

This location also gained 527 active houses for sale as of June 30, 2016, with a price category of $200,000 to $249,999 and considered one of the biggest amounts of properties for sale at 106 houses. 85042 reported a 6% increase in the total active listed inventory, which is a net profit of 30 year-over- year, as compared to the 497 houses for sale in 2015.

85042 had an overall 305 home sales year-to- date throughout the month of June 2016, and the average selling price of $215,137 gave a growth of 19.1% from this time period a year ago. The total number of home listing sold in 85042 showed a 9.3% growth from last year, which obtained a number of 279 houses sold, a net profit of 26 completed transactions. The price range of $200,000 to $249,999  had one of the largest amounts of sales at 70 acquisitions this year.


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Written by ratetake


Martin is Head of Real Estate and Finance division at RateTake. He creates content that helps people understand and make the right decisions for their financial future.