Norada Real Estate Investments

Cincinnati Housing Market: Prices, Trends, Forecast 2023

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Cincinnati, the third-largest city in Ohio, is experiencing a housing market that has been on the rise in recent years. With a growing economy and affordable housing options, Cincinnati is attracting a lot of attention from buyers and investors. In this article, we will explore the current prices, trends, and forecast for the Cincinnati housing market in 2023.

Cincinnati Housing Market Trends for 2023

The Cincinnati housing market has been a topic of interest for both homebuyers and real estate professionals. To gain insights into the current state of the market, let's delve into the April 2023 housing market report released by the Cincinnati Area Board of REALTORS®. The Cincinnati housing market report reveals mixed trends and changes compared to the same period of the prior year.

While the median sold price and active inventory showed positive signs, there were decreases in units sold, total sold volume, and new listings. Understanding these market trends can help you make informed decisions in the Cincinnati housing market.

Median Sold Price

The median sold price in April 2023 showed a significant increase compared to the same month of the prior year. The median sold price rose by 9.1%, reaching $279,900. This upward trend is promising for homeowners and indicates a healthy appreciation in property values. Looking at the year-to-date (YTD) figures, the median sold price stood at $259,900, marking a 5.4% increase. In contrast, the prior YTD median sold price was $246,500, reflecting a growth of 5.4%.

Units Sold

The number of units sold in April 2023 experienced a decline when compared to the same month of the previous year. The market saw a decrease of 28.5%, with a total of 1,379 units sold. Examining the YTD data, the units sold amounted to 4,860, indicating a decrease of 24.5%. The prior YTD figures stood at 6,433 units sold, highlighting a notable difference.

Total Sold Volume

The total sold volume in April 2023 witnessed a significant drop when compared to the previous year. The total sold volume decreased by 23.3%, reaching $455.87 million. In terms of the YTD numbers, the total sold volume stood at $1.52 billion, reflecting a decrease of 19.9%. The prior YTD total sold volume amounted to $1.9 billion, showcasing a substantial decline.

Active Inventory

The active inventory, which represents the number of available properties for sale, saw a slight increase of 1.1%. This means there were 1,287 properties actively listed in the Cincinnati housing market in April 2023. This increase in inventory provides more options for potential homebuyers and indicates a healthy level of market activity.

Median Days on Market

The median days on the market is an essential metric that reflects the average time it takes for a property to sell. In April 2023, the median days on the market stood at 50%, indicating a relatively fast-paced market. Homes were selling quicker compared to the prior year, providing a favorable environment for sellers.

New Listings

The number of new listings in April 2023 experienced a decline of 27.3% compared to the previous year. A total of 1,778 new listings entered the market during this period. This decrease in new listings may contribute to the reduction in overall inventory and impact the dynamics of the housing market.

Cincinnati Real Estate Market Forecast 2023-2024

The Cincinnati real estate market has shown positive growth and stability in recent years. With an average home value of $229,239, representing a 2.6% increase over the past year, the market has proven to be a favorable environment for homeowners and investors alike. Additionally, homes in Cincinnati tend to go pending within approximately four days, indicating a high demand and a competitive market.

When examining the forecast for the Cincinnati real estate market, it's important to consider various factors and projections. Based on the Cincinnati MSA (Metropolitan Statistical Area) level forecast, the market is expected to continue its upward trajectory. The forecast predicts a growth rate of 0.6% by May 31, 2023, followed by a further increase of 1.2% by July 31, 2023. Looking ahead to April 30, 2024, the forecast indicates a significant growth rate of 5.1%.

These forecasts suggest that the Cincinnati real estate market will maintain its positive momentum, providing opportunities for homeowners and investors to see appreciation in property values. The projected growth rates indicate a healthy market with increasing demand and potential for long-term investment gains.

In addition to the forecasted growth, other market indicators are worth considering. The median sale-to-list ratio of 0.995 as of March 31, 2023, showcases a balanced market where homes are generally selling close to their listed price. Furthermore, approximately 33.6% of sales have been recorded as exceeding the list price, indicating a competitive environment where buyers are willing to pay more for desirable properties. On the other hand, about 49.0% of sales have been under the list price, suggesting that buyers still have some opportunities for negotiation.

Lastly, the median days to pending, which stood at four days as of April 30, 2023, highlights the fast-paced nature of the Cincinnati real estate market. Homes are selling relatively quickly, emphasizing the importance of acting promptly when interested in a property.

Cincinnati Real Estate Market
Credits: Zillow

Cincinnati Real Estate Investment Overview

Cincinnati is a bustling city located in the southwest corner of Ohio, known for its strong economy, diverse culture, and affordable cost of living. The Cincinnati real estate market has seen steady growth in recent years, with home values increasing by 4.6% over the past year, according to Zillow.

Despite a slight decrease in home sales in February 2023 compared to the previous year, the market is expected to remain stable and strong throughout 2023 and 2024. With median days on the market of just 9 days and a high percentage of sales under list price, Cincinnati is a seller's market, indicating that it may be an advantageous time for sellers to list their properties.

Investors interested in the Cincinnati real estate market can benefit from the area's diverse range of neighborhoods, from the upscale and trendy Over-the-Rhine district to the more affordable suburban areas like Paddock Hills and Winton Place. The city's economy is thriving, with a strong job market and low unemployment rates, making it an attractive option for those seeking to relocate or invest.

Here are top reasons why Cincinnati's MSA real estate market may be a smart investment:

Strong Economic Growth:

Cincinnati's economy has been growing steadily, with a low unemployment rate of 3.6% and a diverse range of industries, including healthcare, education, finance, and manufacturing. According to the Bureau of Economic Analysis, Cincinnati's gross domestic product (GDP) has grown by 6.5% from 2016 to 2021, outpacing the national average of 4.6%. This economic growth has led to a strong demand for housing, making Cincinnati an attractive market for real estate investors.

Affordable Housing Market:

Cincinnati's housing market is relatively affordable compared to other major metropolitan areas in the United States. According to Zillow, the median home value in Cincinnati is $215,066, which is below the national median value. This affordability, combined with the city's strong economy and low cost of living, makes it an attractive option for young professionals and families.

Strong Rental Market:

Cincinnati has a strong rental market, with a vacancy rate of only 3.6% and average rent prices of $1,128 per month, according to RentCafe. Additionally, Cincinnati is home to several major universities, including the University of Cincinnati and Xavier University, which provide a consistent stream of rental demand from students and faculty.

Growing Population:

Cincinnati's population has been growing steadily over the past decade, with a population of over 2.1 million people in the metropolitan statistical area (MSA) in 2021. According to the U.S. Census Bureau, the population of the Cincinnati MSA is projected to increase by 3.1% from 2020 to 2030. This growing population, combined with a strong economy and affordable housing market, makes Cincinnati a prime location for real estate investment.

Infrastructure and Transportation:

Cincinnati has a well-developed transportation infrastructure, including a major airport, several major highways, and a robust public transportation system. Additionally, the city has invested heavily in infrastructure projects, such as the Cincinnati Bell Connector streetcar, which connects several neighborhoods in the city. This infrastructure and transportation network make it easier for residents to commute and access amenities, which further increases the demand for real estate in the area.

Stable Real Estate Market:

Cincinnati's real estate market has remained stable over the past decade, with steady appreciation rates and low volatility. According to Zillow, the Cincinnati housing market has appreciated by 4.6% over the past year, which is in line with the national average. This stability makes Cincinnati an attractive option for real estate investors who are looking for a steady return on their investment.

Growing Tech Industry:

Cincinnati's tech industry has been growing rapidly in recent years, with several tech startups and established companies calling the city home. According to CBRE's Tech Talent Report, Cincinnati ranks 27th out of 50 U.S. cities for tech talent, with a 13.1% growth rate in tech jobs from 2015 to 2020. This growing tech industry provides a stable source of employment and further drives the demand for housing in the city.

In conclusion, Cincinnati's strong economy, the affordable housing market, strong rental market, growing population, infrastructure and transportation network, stable real estate market, and growing tech industry make it an attractive location for real estate investors. Whether you're looking to buy and hold rental properties or flip houses for a quick profit, Cincinnati's real estate market offers plenty of opportunities for savvy investors.

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.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Cincinnati.

Consult with one of the investment counselors who can help build you a custom portfolio of Cincinnati turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Cincinnati.

Not just limited to Cincinnati or Ohio but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Cincinnati turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

There are many other markets in the state of Ohio for real estate investing. Columbus is one of them. The Columbus real estate market is a bright spot in a declining region. It mixes smart redevelopment, quality of life, and growth to create a stable, slow-growing market that will be thriving well into the foreseeable future. If you’re looking to buy Columbus investment properties, it makes sense to do so when inventory levels are relatively high, like in the current phase of the pandemic. The surplus of available opportunities can lead to softer negotiations with sellers. Columbus has a lower cost of living than the national average.

Cleveland is another good market to invest in real estate. Cleveland is a notable exception to the decline of the Rust Belt cities. It has managed to reinvent itself, shifting from classic manufacturing to biotech and medicine. In the process, it has maintained its population and has strong potential for growth both economically and demographically.

Let us know which real estate markets you consider best for real estate investing!

Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

REFERENCES

  • https://www.cabr.org/category/homesales
  • https://www.zillow.com/Cincinnati-oh/home-values
  • https://www.neighborhoodscout.com/oh/cincinnati/real-estate
  • https://www.littlebighomes.com/real-estate-cincinnati.html
  • https://www.realtor.com/realestateandhomes-search/Cincinnati_OH/overview

Rental Property Insurance: Protect Your Investment Today

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What is a Rental Property Insurance?

Rental Property Insurance

Rental property insurance is a type of insurance policy designed to protect property owners who rent out their properties to tenants. It provides coverage for damages or losses to the rental property caused by certain perils, such as fire, theft, vandalism, and natural disasters. Additionally, rental property insurance can provide liability coverage, which protects landlords from legal claims and lawsuits brought by tenants or other third parties who suffer injuries or property damage while on the rental property.

The coverage provided by rental property insurance typically includes the physical structure of the rental property, as well as any personal property that is owned by the landlord and kept on the property for tenant use, such as appliances, furniture, and fixtures. Some rental property insurance policies may also cover lost rental income if the property becomes uninhabitable due to a covered loss.

It's important to note that rental property insurance is different from renters insurance, which is designed to protect the personal property of tenants rather than the property itself. If you own a rental property, it's important to consider purchasing rental property insurance to protect your investment and financial interests.

Understanding Rental Insurance Coverage Options

Rental property insurance is essential for landlords who want to protect their investments from unexpected losses and liabilities. There are several types of coverage available with rental property insurance, each of which is designed to provide protection for different risks that landlords may face.

One of the most important types of coverage is property damage. This coverage helps landlords pay for repairs or replacement of their rental property if it is damaged by a covered event, such as a fire, storm, or vandalism. This coverage is essential for landlords because repairs to rental properties can be expensive, and damage can lead to lost rental income [1].

Another important type of coverage is liability insurance. This coverage helps landlords pay for legal fees and damages if a tenant or visitor is injured on their property. Liability insurance can also cover damages caused by a tenant’s actions, such as if they accidentally start a fire. Without liability insurance, landlords could be personally responsible for these costs, which could be financially devastating [2].

Finally, rental property insurance can also include coverage for lost rental income. This coverage provides landlords with compensation if their rental property is uninhabitable due to a covered event, such as a fire or flood. This coverage can help landlords pay their mortgage and other expenses while repairs are being made [1].

It is important for landlords to understand which types of coverage are included in their rental property insurance policy and which types of coverage may be necessary to add. Depending on the specific risks that a landlord faces, additional coverage may be required to fully protect their investment.

Choosing the right rental property insurance policy can be challenging, especially for first-time landlords. There are many factors to consider, including the size and type of property, location, budget, and specific risks that need to be covered. Here are some tips for choosing the best rental property insurance policy:

  1. Understand the coverage options: As discussed in the previous section, there are several types of coverage available with rental property insurance. It is important to understand what is included in a policy and which types of coverage may be necessary to add based on the specific risks a landlord faces.
  2. Shop around: It is important to compare policies and prices from several different insurance companies before choosing a policy. This can help landlords find the best coverage for their budget and specific needs.
  3. Consider the deductible: The deductible is the amount that a landlord must pay out of pocket before insurance coverage kicks in. A higher deductible will generally result in a lower monthly premium, but it may also mean higher out-of-pocket costs in the event of a claim.
  4. Look for discounts: Some insurance companies offer discounts for landlords who have multiple properties, have installed safety features in their rental properties, or have a good claims history. It is important to ask about discounts when shopping for insurance.
  5. Work with an insurance agent: An experienced insurance agent can help landlords understand their options and choose the best policy for their needs. They can also provide guidance on how to reduce risks and prevent claims.

How to Choose the Right Insurance for Your Rental Property?

The number one goal of your rental business should be to make money, not give it away.  One way to protect you and your investment is to have proper insurance in place. Let me introduce you to four insurances that you should consider.

A Good Lease

The first insurance that I possess is the insurance of a good lease and a thorough move-in inspection. More than once I have referred to the pictures of a move-in inspection to counter a tenant's claim about a pre-existing condition. I remember one time during a preliminary move-out inspection I noted a cracked ceramic floor tile. The tenant claimed that it was like that when they moved in.

I turned on my laptop, pulled up the appropriate picture from the move-in inspection, and proved to the tenant that the crack was not there when they moved in. The next insurance that I possess is the kind purchased from my friendly neighborhood insurance professional. However, take note that there is more to consider than just regular old homeowner's insurance. There are several kinds of insurance that you want to consider as a landlord.

Property Insurance

When it comes to insuring my personal rental properties, I have a landlord policy on each rental unit that I own, whether that unit is paid off or not. Landlord policies have the added benefit of additional liability protection for the landlord. You also need to ensure that each policy carries sufficient coverage to satisfy your mortgage lender.

Depending upon your rental's geographic location, there are some additional property insurance policies you may want to consider. In California, many people have earthquake insurance. In other areas, you may want to investigate flood insurance. Your insurance professional can educate you on the particular hazards you might wish to insure against for your area.

Umbrella Insurance

The third insurance that I have is an umbrella policy, which acts like an umbrella over all of my other existing insurance policies. Examples of when this coverage may come into play include when a guest of your tenant slips and falls in one of your rental properties and is severely injured, or when a storm occurs and a neighbor's property is damaged by a tree falling from your property.

Your landlord insurance policy has a liability limit. The umbrella policy picks up after those limits are exhausted and therefore usually carries a very high deductible, $300,000 or higher. Those deductibles seem high until you are sued for $750,000 and lose. In this example, the first $300,000 would be picked up by your primary insurance; the balance of $450,000 would be yours to pay. An umbrella policy helps pay that off. Otherwise, virtually everything you own would be a fair game against that judgment.

Renter's Insurance

The fourth insurance is renter's insurance. Remind your tenants that their personal property and vehicles, or those of their guests, are not covered by any of your insurance policies against loss or damage due to fire, theft, vandalism, rain, water, criminal or negligent acts of others, or any other cause. Coverage for those items comes only through a renter's insurance policy.

Renters' insurance traditionally covers the tenant's and any guest's possessions, like furniture, clothes, computers, and bikes. Additionally, if a plumbing backup floods your property and renders it uninhabitable, the renter's insurance may cover the cost of a temporary place to live until the tenant can move back into your property. Some renter's insurance policies may also have protection for the tenant against lawsuits.

You should always require renter's insurance when the tenant has a pet in the residence. You do not want the tenant's dog biting a neighboring kid and then have the neighbor sue you. At my office, we will not allow tenants to receive keys without proof of a paid-in-full renter's insurance policy. If the tenant does not have a policy at the time of lease signing, we make the tenant call an insurer and obtain one on the spot.

Insurance is all about risk management; you buy or require insurance to manage some of those risks. Knowing your real estate laws is the best defense. After that, obtaining the insurance discussed in this article is an intelligent way to begin managing your risk. By following these tips, landlords can find the best rental property insurance policy to protect their investment and provide peace of mind.

Commercial vs Residential Real Estate Investing in 2023

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In the debate between residential vs commercial real estate investment, many ask, “Which is better?” The answer depends on a variety of factors such as your budget, your existing area of expertise, and your risk tolerance. We’ll explain how each of these factors can help you decide which is better in your case.

Residential or commercial real estate investing is more than just buying a home or looking for an investment property. Do you think it is easy to predict success in a real estate business, where circumstances keep fluctuating now and then? To some extent, the possible hindrances can be controlled with a set of ground rules which you need to implement on your next residential or commercial real estate investing deal.

Benefits of Residential Real Estate Investment

It is far easier to get a loan for residential real estate than commercial real estate because the residential real estate market is considered much more stable. Individuals and families always need a place to live. Businesses can more easily move, and you can lose far more money by picking a bad commercial tenant than a family that misses the rent one month. This means residential vs commercial real estate investing favors residential real estate if you don’t have experience vetting tenants.

People will forgo credit card bills and cut their budgets to avoid being evicted. Commercial tenants may miss the rent for months, and it is difficult to evict them. Furthermore, you could lose commercial tenants whose bankruptcy costs you months of back rent. This means you’re more likely to continue seeing rental income from financially stressed apartment dwellers than commercial tenants.

This makes residential real estate safer than commercial real estate during a financial downturn. It may go down in value and see more skipped payments than before, but it won’t go down in value or cash flow as much as an empty strip mall. Residential real estate may be filled quickly when someone is evicted. Perhaps you put the rental property on a short-term rental site to cater to tourists coming next weekend.

Or you lower the deposit to get a tenant in at the start of the next month. It can be hard to find a new commercial tenant. Residential real estate thus comes with less risk to the landlord that they’ll go months without cash flow from the property. Residential real estate has better long-term average growth. The property value automatically increases with inflation, and rents are easily increased at the rate of inflation, as well.

Residential vs Commercial Real Estate Investment

With commercial tenants, you may be locked into a set rental rate for years based on the contract you signed. In the residential vs commercial real estate investing debate, residential wins if you have limited cash. You can buy one or two houses for less than it takes to buy a strip center or store. The residential vs commercial real estate investing debate is often moot if you end up renting out your old house or inherited property.

The residential vs commercial real estate debate tends to focus on cash flow numbers. However, when you’re deciding between residential vs commercial real estate, recognize that you probably have more expertise transferable to residential real estate investing. Many contractors know how to renovate homes. This makes them qualified to buy fixer-uppers, repair them and sell them for a profit.

All they have to do is get a handle on the financial side and the marketing of property for sale. An apartment manager is better suited for the residential side of the residential vs commercial real estate debate. You already know how to vet tenants, collect rent and handle late-night calls for plumbing repairs. In general, new investors can find more resources for investing in residential real estate over commercial real estate.

You have to be careful not to renovate a property to look like a dream home that’s more expensive than what the market would bear. However, as a resident, you have more understanding of the residential real estate market than the commercial one. You would also be better able to understand the business fundamentals when you loan someone money to rehab a house or invest in a real estate investment trust over buying shares in a new commercial property.

Residential real estate is generally more liquid than commercial real estate. You’ll always have more buyers for a single-family home than a storefront. You’ll have more potential investors for a small triplex or ten-unit apartment building than for a strip center.

Tax Benefits of Residential Real Estate Investment

Tax Benefits of Residential Real Estate Investing

Property taxes do affect profit but it highly depends on whether you are a professional or a passive investor. If you are a professional investor, your losses are fully deductible against all income; otherwise, it is only deductible up to $25000 against your rental income. This incurred loss which exceeds $25000, can be carried forward to the following year.

Operating expenses such as mortgage interest, property management fees, property taxes, and repair & maintenance can all be claimed as deductions against rental income.

Real estate profits are not taxed until you sell the property. For example, if you purchase a home for $150,000 and it appreciates to $200,000, the $50,000 gain is protected from taxes until you sell the property.

Rental property owners may assume that anything they do on their property is a deducible expense, but that is not true according to the IRS. The money you receive for rent is generally considered taxable in the year you receive it, not when it was due or earned; therefore, you must include advance payments as income.

Benefits of Commercial Real Estate Investment

Commercial real estate investment can be much more profitable than residential real estate. For example, you can charge much higher rents per square foot in desirable properties, because the tenants are generating revenue from the property. You may be able to reduce your expenses by offering a modest discount on the rent in exchange for a triple net lease.

If they pay the insurance, property taxes, and rent, you’ve dramatically reduced your bookkeeping labor and your expenses. Just make sure they actually pay the insurance and property taxes. If you already run a commercial business, the commercial side of residential vs commercial real estate investing is the better choice for you. You could start by subleasing offices or a corner of your storefront.

You might lease half of the store to a complementary business. If you move into a larger building, you may get experience in commercial real estate by subleasing space before you use it. This sets you up for success on the commercial side of the residential vs commercial real estate investing debate. Buy your building and sublease it out, and you’re on the commercial side of the residential vs commercial real estate investing argument.

Commercial properties tend to be expensive, whether someone is building an office building or mega-mall. This leads many commercial property developers to issue shares. This is why you find as many or more commercial property real estate investment trusts than residential ones. Residential real estate investment trusts exist, though they tend to focus on apartments over single-family homes.

Commercial REITs typically have a higher rate of return, and this form of commercial real estate investing is more liquid than either shares of a commercial property or ownership of a single-family home. Commercial real estate investment can often give you more flexibility. When you buy commercial REITs, you can choose funds that specialize in medical real estate, office space, or other niches.

And you can choose to focus on a particular niche, as well. Upgrade a storefront and aim at a particular industry when seeking renters. Rehab offices near a hospital and cater to medical service providers. Conversely, you could snap up a building that has a particular purpose such as a restaurant, revamp it, and rent it out to a more successful chain in the same industry. You can choose which industry you cater to by choosing the property.

Should You Invest in Residential or Commercial Real Estate?

If you don’t have experience in real estate investing, we recommend residential real estate. If you have experience managing commercial properties, then commercial wins over residential real estate investing. If you have limited cash or low-risk tolerance, then we recommend residential vs commercial real estate.

Let’s go through the two main guidelines which are inevitable if you wish to succeed in residential real estate investing.

1. Look For a favorable Growth Market

If you are a seasoned real estate investor, you will definitely have importance for a healthy market environment, but if you are a newer investor, you will need to shed some light on this factor. It can go even worse if you have purchased a property with an adjustable-rate mortgage because sometimes the interest rates keep rising and you will end up paying more even if you can’t afford it. Such situations alleviate the demand for the entire real estate market in particular locations.

2. Always Be Particular About The Location of Investment Property

If you find a location with falling interest rates, manageable GDP growth, and good employment rates, then you can start looking for a smart property to invest in. Analyze and research the location before investing in any residential real estate property.

Types of Residential Real Estate Investing

Well, the desired investment is found in an ideal city that is expanding in many different factors related to the real estate market. If after proper analysis, you find the market conditions look vague, it is recommended to play safe by sticking to a particular location that is familiar to you.

1. Fix and Flip

Fix and flip is a great choice if you have been in the business for a long time, or consider consulting a real estate investment adviser to get proper guidance. You need to cherry-pick the best deals from real estate auctions, hire contractors to rehab the properties, and sell them for top dollar to an investor. Rehabbing a property adds value to it.

When you buy a property to fix and flip, the increase in its value is significant and you can profit by selling it immediately. Renovating the property will reap great profit (when you sell it). Most investors don't have the ability or time to take every necessary step an accomplished fix and flipper can, and will happily pay more to get a property that doesn't require rehab.

2. Rental Property Investment

Yes, you should go for a single-family rental home if you are looking for a small and affordable investment. It is easy to exit, unlike a multi-family rental property which will make you think twice due to heavy investment. Managing a rental property is quite simple if you hire an efficient property management team around the city.

They not only maintain your property but also help you in finding the best-suited tenant who is vetted and would less likely default on timely rent payment. Click on the link to know How To Buy Rental Properties With No Money Down.

Location is an inevitable factor in the residential real estate investing business it is further linked to various factors like employment opportunities, population, and affordability (which determines profit). Below listed are few locations which will justify this statement and further motivate you to look out for the best location to invest in residential real estate.

Your first investment property can be quite lucrative if you prepare adequately. Before starting in Real Estate Investment, do research all about the property and location a lot. Using a real estate agent can help you a lot in real estate investing. The benefit of using a real estate agent is that they have a formal education, years of experience, and neighborhood knowledge.

An agent will help in price negotiation, give you market conditions and forecasts. A real estate agent will help the buyer in finding the right property at a good price which is a critical factor to succeed in real estate investment. While hiring an agent you must find out how many transactions do they close a month/year. How much is the commission? (If you are a seller. Buyers aren't charged commission.)

How popular is their website and where do they usually get their leads? How long have they been a realtor/agent? It's also very important to check if they can respond to your questions/requests within a reasonable amount of time. Another tip, look at different Realtors in your area and compare them.

You will find their reviews on sites like Zillow.com and Realtor.com. Most real estate agents stay in business because satisfied clients refer them to friends, family, neighbors, and coworkers. Ask the people around you who they have used and ask them to describe their experiences with that real estate agent.

For 2021, real estate market analysts agree that the outlook is very bright, particularly in certain markets. Different experts will give you different opinions on which market is the best, but most top ten lists have many of the same cities listed. For instance, some experts list expensive markets like Sacramento and San Jose Metro Areas as their top picks while some have Las Vegas at the top of its leader board.

Other cities that are lucrative for investing include Dallas, Nashville, Raleigh-Durham, and Salt Lake City. Each city has assets that make it attractive to new residents and new investors. Those assets add up to a very bright future for the real estate market in their specific area. The market information for these cities is based on predictions and forecasts for 2021.

If you are interested in buying rental properties and portfolios at this time, you can choose the Houston Housing Market. Houston has everything: the people, the diversity, the business climate, being world-renowned in energy, medicine, space, and manufacturing, and above all a booming real estate market.

1. Benefits of Residential vs Commercial Real Estate Investing in Las Vegas

Las Vegas is a much lower cost of living area and features very good investment potential as well. Median home prices are at $285,045 with sales growth rising at 4.9% and prices increasing at 6.9%. The economy in Las Vegas is growing at 8.7% compared to 6.4% growth for the rest of the top 100 cities.

The high demand was followed by an increase in population, as well as an overall improvement of the economy in the area. All these factors have had a huge impact on the Las Vegas housing market, which is considered one of the hottest markets in the US at the moment.

Some of this growth is being fueled by California residents who have sold more expensive homes, maybe due to retirement, and are looking to move to a lower cost of living area. They have a lot of cash from the sale of those more expensive homes that they can spend in the Las Vegas real estate market.

2. Benefits of Residential vs Commercial Real Estate Investing in Seattle

Seattle housing market is another area with continued strong growth. Amazon has plans for expansion projects that would occupy 12.8 million square feet by 2022. Other large-scale projects either newly completed or under construction, help explain the 100,000 new residents since 2010, with most of those coming in the last four years.

Those factors help position Seattle with 102,212 job openings to go along with a median household income of $78, 623 and a home value growth forecast of 5.4%. Median home prices are at $650,000, up $200,000 since 2014. Filling those job openings will continue to bring new residents to the Seattle area, which is a good sign for the residential real estate market.

Seattle home prices rose faster in October 2019 than they have for a year. In Seattle, October prices rose 3.3% from a year ago, to $775,000 — the largest percentage increase in 12 months. Tacoma was crowned the nation’s hottest housing market in May. Since then, other midsize cities in Washington state have overtaken their growth.

3. Benefits of Residential vs Commercial Real Estate Investing in Denver

Denver housing market shows attractive investment potential. The Denver real estate market hasn’t fully transitioned into a buyer’s market yet. But it’s shifting in that direction. Despite the big gains in housing stock, the Denver area is still very much a seller’s market. Denver-area home prices are holding steady year-over-year and inventory is increasing significantly.

The number of homes for sale in the Denver metro area was up significantly in April 2019 and the median sold price remained unchanged year-over-year, according to the latest data from the Denver Metro Association of Realtors. The tech industry continues to expand, attracting well-paid employees to fuel the growth of the real estate market. Any time you have an expansion of this nature, it drives residential real estate purchases and helps increase property values.

The median home value in Denver is $422,400. Denver home values have gone up 1.4% over the past year and their Denver real estate market prediction is that the prices will fall -0.3% within the next year. The median list price per square foot in Denver is $375, which is higher than the Denver-Aurora-Lakewood Metro average of $268.

The median price of homes currently listed in Denver is $475,000 while the median price of homes that sold is $420,900. The median rent price in Denver is $2,195, which is higher than the Denver-Aurora-Lakewood Metro median of $2,100.

4. Benefits of Residential vs Commercial Real Estate Investing in Portland

Portland comes in with a median household income of $68,676 and 44,845 job openings. The median home value is at $370,700 with an increase of 3.7% forecast. One of the things that will fuel Seattle’s growth is the development of the Zidell yards.

This 33-acre industrial site in the South Waterfront district is set for redevelopment. Plans include several parks, plazas, 2200 residential units, and a waterfront. Nike is planning a 1.3 million-square-foot expansion and there are other expansion products in the city.

5. Benefits of Residential vs Commercial Real Estate Investing in Dallas

The population of Dallas is expected to double in the next 15 Years. It is one of the leaders in the U.S. for employment and population growth. 52.9% of Dallas rents vs. 33% nationally. You will find newly remodeled REOs (2004 or newer). Turnkey rental properties are available at 5% – 15% below market value with a 3-year appreciation forecast of 11.4%.

You should invest in Dallas real estate because Zillow.com ranked Dallas at number 12 on the list of the best places to live in the country in 2017. Dallas housing market is shaping up to continue the trend of the last few years as one of the strongest markets in the United States.

According to Zillow.com, the median home value in Dallas is currently $213,400. Dallas home values have risen by 8.1% over the past year and their Dallas real estate market forecast is that the prices will continue to rise by 4.5% within the next year. 

Dallas’s local economy is a mix of aerospace, computer chips, telecommunications, transport, energy, and healthcare sectors and the Finance and Business Services. These sectors are all providers of good wages which allows for a strong market for Dallas investment properties. For a more in-depth review of the Dallas Real Estate Market, click the link.

6. Benefits of Residential vs Commercial  Real Estate Investing in Atlanta

Located in the state of Georgia, the city of Atlanta is a hotspot for any type of real estate investment. Atlanta has shown promising population growth and employment, which are two signs of a healthy real estate market. You can purchase investment properties in Atlanta for as low as $127,000. Comparing that to the national average, which is $152,000, that’s a pretty significant deal!

Atlanta is one of the top rental markets in the U.S. You can get newly rehabbed properties with tenants. The price of the properties starts at $70,000 with up to $750/mo cash flow. 500 people move to Atlanta every day! 2 million more people are expected by 2030. Real estate properties have a 3-year appreciation forecast of 9.3%. For a more in-depth review of the Atlanta Real Estate Market, click on the link.

7. Benefits of Residential vs Commercial  Real Estate Investing in San Jose

San Jose looks to have a median household income of $110, 040 and a median home value of $1,128,300 with an increase of 8.9% in home value. Unemployment is extremely low and there is a lot of job availability, making this a very attractive real estate market.

If you are an investor, San Jose real estate has a proven record of being one of the best long-term investments in the country. Based on the last twelve months, real estate investors in San Jose, CA have found very good returns. Any housing market will see a large and generally well-funded population of renters if there is a university in town.

San Jose has several that attract students from around the world. Investors in the San Jose real estate market could buy up properties to rent out to the thousands of engineering and computer graduate majors attending the University of California Berkley campus, UC Santa Cruz, Stanford University, Santa Clara University, and California State University.

8. Benefits of Residential vs Commercial Real Estate Investing in Orlando

Orlando has added more than 1,73,900 jobs since the recession with a growth rate of 3.2% every year for the next 10 years. Over the past 5 years, it has grown 217% faster with the increasing job opportunities. Even if this place is one of the most popular locations which is in demand for real estate, you can still find affordable and spacious houses.

Orlando housing market is shaping up to continue the trend of the last few years as one of the strongest markets in the United States. The Orlando real estate market forecast is that the prices will rise by 8% to 10% in 2021. Orlando is the new hub for many young professionals especially those with various types of technological expertise, including engineers and IT professionals.

This city has experienced annual job growth of around 4.4% and is also one of the fastest-growing metro areas in the country. The city is also set to experience its highest job growth rate in the 10 years to come. A market with high job growth is a great market for real estate investment as well within the next year.

9. Benefits of Residential vs Commercial Real Estate Investing in Tampa

Tampa metro area is considered among the top-performing cities in the US. It is listed in the top 20 fastest-growing metros in the US. It has 4 million people and has the potential to cater to more migrants. Tampa real estate may look a bit pricey, but if you make a detailed analysis before investing you can get hold of deals as low as $90,000. There are several nature parks, landmarks, museums, and eateries for tourists to visit in Tampa.

Tourist influx also means an increase in short-term residential contracts, which is a selling point of the Tampa real estate market in 2018. Main tourist attractions include Big Cat Rescue, Busch Gardens Florida, Eureka Springs Park, and Tampa-Bay History Center among many others. Growing tourism has a tremendously positive effect on the real estate in Tampa FL.

10. Benefits of Residential vs Commercial Real Estate Investing in Jacksonville

Jacksonville, Florida is ranked 3rd in Forbes magazine in terms of job availability. The population has increased 24% since 2000 and continues to grow 2% every year. Here the price is too reasonable and as low as 23% compared to the national average. Hence, Jacksonville is highly recommended for investing in residential real estate.

Commercial vs Residential Real Estate: The Conclusion

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.

NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.

This article aimed to educate investors who are keen to invest in residential real estate in 2021. Investing in real estate requires a lot of studies, planning, and budgeting. Not all real estate is solid long-term investments. We always recommend doing your own research and take the help of an expert counselor.

References

  • https://www.biggerpockets.com/blog/NNN-deal
  • https://www.investopedia.com/articles/mortgages-real-estate/10/real-estate-investment-trust-reit.asp
  • https://www.biggerpockets.com/member-blogs/1395/11003-triple-net-lease-properties-returns-are-more-favorable
  • https://www.forbes.com/sites/marcprosser/2017/07/19/data-proves-reits-are-better-than-buying-real-estate/#3fe75799d6b7
  • https://www.investopedia.com/articles/mortgages-real-estate/09/residential-real-estate-invest.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186

How To Retire Early With Real Estate?

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How To Retire Early With Real Estate?

So, how does it feel to Retire Early with Real Estate? When you talk about retiring early with real estate, the default answer for many is, “I’ll pay off the house.” A common second answer is, “I can borrow against my home equity if I need the money.” The best answer would be, “That’s how I pay for my early retirement.” Real estate is often viewed as an effective way to hedge against market volatility. The best way to retire early with real estate is by investing in rental properties as they generate passive income.

The short answer is: yes, real estate is a good investment for retirement if done right. Too many people think that you cannot retire early with real estate because it requires becoming a handyman. In reality, you can outsource that work to a property management company, generally for 10% of the rent collected on the rental property. This means you could buy five to fifteen rental homes and have someone else do the bulk of the work. If you invest in apartment buildings, commercial real estate, or other projects, you are even more removed from the day-to-day operations of the property.

<<<Also Read: Housing Market Predictions>>>

The wrong answer to this question is to start buying properties to rehab and hope that you can sell them at a profit. Yes, house-flipping shows are popular. No, it is not a good way for retirees to invest in real estate. You risk losing a large portion of your nest egg if the property takes longer to sell than expected or if the rehab costs of the property are far higher than expected.

For skilled contractors, this may be a viable real estate investing strategy, but they risk owning their job because they only clear as much money per flip as they’d earn working for others. In summary, house flipping is not a viable method for most to retire early with real estate. When you choose to invest in real estate for your retirement or otherwise, don’t buy properties in an area where people are moving out. Yes, the properties are cheap.

No, you won’t earn much in rent and your ability to sell the property if you want to get out is declining. Be careful of buying rental properties in markets going up, since the property in a good school district may be desirable but the rents you could get are not as high as a percentage of the property’s value. After all, if the rent is too high, they may find it cheaper to simply buy the house next door. Do buy properties to rent that you can sell as required, since those who retire early with real estate may need to sell the property to pay major medical bills or for long-term care.

Can You Retire Early With Real Estate?

retire early with real estate

Before we answer this question, let’s compare real estate to some alternative forms of investments that can be included in your early retirement strategy. Government bonds are theoretically the safest investments around, but they’ve often failed to pay interest rates above the inflation rate. Savings accounts are hardly better. Corporate bonds pay slightly better, but they are hard to find. The higher the interest rate, the greater the risk the business will go under. Nor can you assume that your corporate bonds will pay back your principle.

During the Obama administration, the federal government overturned years of established precedence and said the unions get their money ahead of bondholders, most of whom were retirees.

Stocks that pay dividends were considered a gold standard, but the sheer volume of money pouring into the market via tax-advantaged retirement accounts has driven up their cost relative to the dividends they may or may not pay. You cannot plan a retirement budget off of praying for capital gains. A viable rental income retirement strategy balances income with security.

And this brings us back to the question, “can you retire early with real estate?” Yes, you can retire early with real estate by owning a portfolio of rental properties. The rental real estate retains its value as long as you vet tenants, supervise the properties and maintain proper insurance. It generates cash flow every month the tenants pay, and you can ensure this by vetting tenants and evicting those that don’t pay rent. The return on investment for rental income is in the 5% to 10% range, depending on the type of investment. It is difficult to find those rates of return without far greater risk than rental real estate. This is why it is a good idea if you choose to retire early with real estate than go out for risky investments.

How Investing in Real Estate Can Boost Your Retirement Income?

Yes, you can retire early with a passive real estate income if you do it right. You can follow these successful real estate investment strategies to boost your retirement income.

Investing In REITs For Early Retirement

While owning real estate can be lucrative, it's not necessarily the most feasible option for every investor. Acting as a landlord for some can be both costly and overwhelming. Investing in a real estate investment trust is considered a sound way to secure your retirement.

REITs by comparison, offer many of the same benefits associated with direct property ownership without the hands-on management responsibilities. In this retirement strategy, you're buying shares in REITs or real estate investment trusts. You’re buying shares of a corporation that builds apartment buildings, commercial real estate, or other types of property. They are required by law to pay out 90% of their taxable income as dividends to shareholders. You receive regular income from them, though it may only be paid out annually.

The main benefits of this approach towards securing your retirement are liquidity since you can sell the shares, and the ability to diversify since you can buy shares in medical property developers and apartment builders. Many real estate-related investments have done quite well in the last decade or so. The median sales price of single-family homes hit $315,700 at the end of the third quarter, up 23 percent from the prior peak for values in 2007 before the financial crisis hit.

Compare this to the risk of putting all of your money into a single commercial building or several single-family rental homes. A better way to assess REITs is to look at their funds from operations or FFO. Whereas reported earnings treat depreciation on real estate holdings as an expense that lowers results, FFO adds depreciation back, which more accurately reflects the value of a trust’s property. As you're planning your early retirement strategy for 2019 and beyond, it's important to ask yourself whether a real estate investment trust belongs in your portfolio.

According to Scott Crowe, chief investment strategist at CenterSquare Investment Management, “REITs offer significant advantages to investors who are seeking access to real estate relative to direct property ownership, including much lower asset management costs, improved liquidity in terms of geographic and property sector exposure and greater transparency.”

Rental Income Retirement Strategy

A second viable strategy is retirement through rental income. There are many ways to make passive income in real estate. One of them is direct income from rentals. A rental income retirement strategy is the best option for retiring early with real estate. Once the income surpasses the expenditures, then you are on the winning side. In this strategy, you'd be buying detached single-family homes to rent out. You receive a higher rate of return on these properties than duplexes or triplexes. The properties are easier to sell if you want to get out of them.

We recommend single-family homes over owning condos because condo homeowner association rules could limit how the property is used – including as a rental unit. Another issue is the boom and bust cycle of condos. While you could find a condo at a deep discount during a bust, the lower limit of rent you could charge is set by the surrounding apartments. If you buy at the peak, your return on the investment is lower while the rent you charge is still determined by what surrounding apartments go for. The only potential benefits to condos are the elimination of yard work and the occasional ability to get a bulk discount for buying several properties.

While you can replace your income with a good rental income retirement strategy, you will have to pay the bills either upfront or over the long term. Don’t delay paying for that new roof and have to gut the house to fix the rotting walls. Don’t ignore pest control and have to pay for termite treatment of the property. Don’t skip the process of vetting tenants and end up paying for the damage they cause. Shortcuts will cost you dearly.

These issues arise even if you’re buying condos instead of single-family homes. If you don’t want to do the work or hire someone else to do it, consider investing as a partner in an apartment complex or buying REIT shares instead. Remember, to retire early with real estate, you must choose a property that is “turnkey” and “rent ready.” A good rental property is fully refurbished or a new construction residential property. The property must be in growth markets and must produce a positive cash flow. The property must have a good appreciation potential.

Norada Real Estate Investments can help you retire early with real estate investing. By researching top real estate growth markets and structuring complete turnkey real estate investments, they help you succeed by minimizing risk and maximizing profitability. For below-market value rental properties for sale (Click on the hyperlink).

How Many Rental Properties Do You Need To Retire Early?

The answer to this question depends on how much money you need to retire early on. If each property clears $300 a month, then you need 10 filled properties to replace a $3000 a month income. If you need $6000 a month in income, then you’d need to rent out 20 single-family homes.

According to a recent study, single-family homes in large U.S. cities have generated returns of about 9% annually between 1986 and 2014. Half of that gain was rental income, and half of it was in capital appreciation. This means that rental real estate yielded an average 5% ROI each year after expenses like insurance, property taxes, and maintenance. Those who chose to sell a home gain about 5% per year of capital gains. Average rents were about 10% of the value of the property, but 40% or more went to pay bills like the mortgage, insurance, taxes, and maintenance.

This suggests that if you invest $100,000 into one or two single-family rentals, you’d reap about $5000 a year in rental income. However, that figure is based on purchasing the property outright. In reality, since those figures assume you’re carrying at least a partial mortgage on each property paid in part by the tenant’s rent, you could invest $100,000 into two large single-family homes or four smaller ones worth around $200,000 and reap $10,000 or so in rental income per year.

The more money you put down on a property, the more you clear each month. At the other end of the spectrum, if you put 10% down on each property, you may only clear $300 a month in passive income and need ten homes to generate that $3000 a month income stream. If you can buy the properties outright, you could clear $700-$1000 a month – and in the last case, you only need three single-family homes to pay your bills. Note that the rental income retirement strategy will depend in part on the level of debt you take on and the interest rates you pay on the debt, so run the numbers before you buy a rental property.

This means that your rental income retirement strategy depends on several factors. How much income do you need to pay your bills? And how much risk are you willing to take in the form of debt? Greater debt levels could yield many properties that end up paying your bills, but if you don’t manage costs and make sure the rent is paid, it can all collapse on you.

Conversely, you have significant upside potential if you can live on less than the generated cash flow and start paying down the mortgages. Once a house is paid off, you clear far more income from it each month without additional expenses. If you have a small portfolio and aggressively pay down the debt, you have an inflation-proof way to retire early with real estate since your income will automatically go up with time.

If you are a beginner in rental property investing, it is very important to read good real estate books. You must also learn from successful real estate investors who have retired early on in their lives by investing in some of the best real estate markets like the Dallas Housing Market. Dallas housing market is a great market because it has a strong economy and a constant population growth which will make your pockets bigger. As rents go up smart investors should invest in Dallas for their early retirement.

Another great market for investing for your early retirement is the Houston Housing Market. The Houston Real Estate Market is becoming a hotbed of buyer activity that could be beneficial for real estate investors; just ask the multitude of overseas investors who are choosing Houston as the city of choice to invest in for the foreseeable future.

We also recommend these hottest real estate markets for investors looking to build their portfolio of single-family rental homes for their early retirement. The single-family market is particularly hot right now. Following the housing market decline in 2007, single-family rental properties became favorable options for investors, saving on construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate.

Almost all the housing demand in the US in recent years has been filled by single-family rental units. Between 2019 and 2020, the number of built-to-rent residences – single-family homes designed specifically for rental purposes — grew by 30%. They currently account for around 6% of all new homes built in the United States, a figure that is expected to grow in the next decade. Rent growth is strong in every price tier, but strongest at the very top and some markets are hotter than others.

Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified.

References

Condo restrictions
https://www.nolo.com/legal-encyclopedia/which-better-return-investment-condos-single-family-homes.html

ROI of single-family homes
https://www.usatoday.com/story/money/personalfinance/columnist/2018/05/24/real-estate-heres-how-much-you-can-expect-earn-landlord/618206002/

Property management
https://www.marketwatch.com/story/5-things-to-know-about-investing-in-single-family-rental-homes-2018-05-29

40% of rent goes to expenses, not including mortgage
https://www.forbes.com/sites/erincarlyle/2016/03/31/the-best-markets-for-investing-in-single-family-homes-right-now/#77eed9184496

REITs
https://money.usnews.com/investing/articles/2017-02-21/are-reits-right-for-your-retirement-portfolio

Phoenix Housing Market: Prices, Trends, Forecast 2023

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The latest data show that the Phoenix housing market has seen a decline in sales volume but an increase in prices, which suggests that demand for homes is still strong. The decline in new inventory can be attributed to the increase in mortgage rates, making it difficult for would-be sellers to find the right home. However, boomers may provide some relief to the current shortage of inventory if they decide to sell and downsize.

Projections for the Phoenix housing market suggest that while the median sales price may rise slightly in the coming months, sales volume may continue to decrease. Buyers should expect increasing competition from each other as they chase a dwindling number of homes for sale, while sellers will have the upper hand in negotiations.

ALSO READ: Arizona housing market forecast 2023

According to Zillow's home value index, typical property values in Phoenix-Mesa-Scottsdale Metro declined by 1.3% over the last twelve months. The latest forecast is that Phoenix-Area home prices are projected to grow by 1.0% between March 2023 to March 2024. According to CoreLogic HPI, Phoenix Metro continued to experience price increases in February with a growth of 0.1% year over year.

To uncover where housing markets are cooling off most, SmartAsset analyzed the 100 largest metro areas, 92 of which had complete data. Phoenix-Mesa-Chandler, Arizona ranks No. 3 overall. The metro area has the fifth-highest percentage of house listings with a price cut (39.61%), which is 25% points higher than a year ago.

Another report obtained by Arizona's Family predicts that the Phoenix housing market could see a price drop of up to 25% in 2023 and 2024, similar to the 2008 Great Recession. The same report suggests that Arizona could be one of the states to experience the most significant drop in housing prices in the West.

Phoenix Housing Market Report For March 2023

Phoenix Metro Area: According to the Arizona Regional Multiple Listing Service, there were 7,417 home sales reported by ARMLS, which is a decline of 22.1% year over year. The median sales price also decreased by 8.7% year over year to $419,900.

Sales Volume and Prices

Sales volume in the first quarter of 2023 was down 22.1% year over year. However, the average sales price of a home increased for the second consecutive month, rising 3.4% month over month, an increase of $17,600. The median sales price of a home also increased for the second consecutive month, rising 1.9% month over month, an increase of $7,900. This suggests that despite a decline in sales volume, the demand for homes in the Phoenix market is still strong.

New inventory was down 19.1% year over year, which is consistent with the decline in sales volume. The increase in mortgage rates is the key reason new listings have declined sharply year over year. Not only were homes purchased in 2020, 2021, and early 2022 at great rates, but a large number of refinances also took place. Elevated mortgage rates are perhaps a bigger deterrent for would-be sellers than for would-be buyers. Supply registers just below 60% of what would be considered typical or average, making it tough for buyers to find the right home.

Boomers' Impact on the Housing Market

While supply is dwindling, baby boomers, defined as Americans between the ages of 55 and 74, account for nearly 42% of homeowners nationwide. For homeowners with low mortgage rates, it makes perfect sense to stay put. However, boomers with either low or no mortgages are in a position to sell their homes and downsize. This could provide some relief to the current shortage of inventory.

Forecast for the Phoenix Housing Market

The ARMLS Pending Price Index is projecting the median sales price will rise ever so slightly to $420,000 in April 2023. If projections are correct, the median sales price will be 11.58% lower than May 2022’s record high of $475,000. The year-over-year median sales price is expected to be 10.64% lower. Our models predict that year-over-year sales volume will be about 20% lower, indicating that the demand for homes may continue to decrease in the coming months.

Is Phoenix a Seller's Real Estate Market?

The following housing market median prices are based on all properties listed for sale on Realtor.com. Land and multi-unit residences included. This data is provided as an informational resource only. Phoenix, Arizona is experiencing a seller's real estate market in March 2023. This is due to a high demand for homes and a limited supply of available properties, which creates competition among buyers and drives up prices.

The sale-to-list price ratio of 98.79% in Phoenix indicates that homes are selling for almost the asking price on average, and the fact that homes are selling 1.21% below the asking price is further evidence of a seller's market. Additionally, the average time it takes for a home to sell in Phoenix is 59 days, which is relatively short and indicates that properties are not staying on the market for very long.

The median listing home price in Phoenix is $464.9K, with a median listing home price per square foot of $284. This shows that homes in Phoenix are more expensive compared to other areas in Maricopa County. Furthermore, there are 37 neighborhoods in Phoenix, with Arcadia being the most expensive neighborhood, with a median listing home price of $1.6M, and Central City South being the most affordable, with a median listing home price of $305.5K.

Phoenix is the seat of Maricopa County and the largest city in the state. Maricopa County is located in the central part of the state of Arizona and is the most populous county in the state. The county covers a total area of 9,224 square miles and has a population of over 4.6 million people as of the latest estimates. It is home to the state capital, Phoenix, as well as many other cities and communities.

In March 2023, the median listing home price in Maricopa County, AZ was $494K, which was a decrease of -1.2% compared to the previous year. The median listing home price per square foot was $269, which is slightly higher than the national average. The median home sold price was $445K.

Maricopa County is also currently experiencing a seller's market, with more people looking to buy homes than there are homes available. The sale-to-list price ratio for Maricopa County was 98.55%, meaning that homes sold for an average of 1.45% below their asking price in March 2023. A balanced market typically has a total sales-to-total listings ratio between 0.12 and 0.2.

Markets with a ratio above 0.2 tend to favor sellers, while markets with a ratio below 0.12 tend to favor buyers. Homes in Maricopa County, AZ typically sell after 62 days on the market, which is slightly longer than the national average. However, the trend for median days on the market in Maricopa County, AZ has gone down since last month, and slightly up since last year.

Phoenix Housing Market Forecast 2023-2024

What could be the Phoenix real estate market predictions for 2023? 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 include 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. The current typical home value of homes in the Phoenix-Mesa-Scottsdale Metro is $434,289. Home values have gone down 1.3% over the past twelve months.

According to NeighborhoodScout.com, in the past ten years, Phoenix real estate appreciated by 261.05%. This amounts to an annual real estate appreciation of nearly 13.70%, which puts Phoenix in the top 10% nationally for real estate appreciation.

Here is the latest housing forecast for Phoenix Metro Area.

  • Phoenix-Mesa-Scottsdale Metro home values have gone down 1.3% over the past year.
  • The Phoenix metro housing market forecast ending March 2024 is positive.
  • Zillow predicts that Phoenix metro home values may drop by 1.0% between March 2023 to March 2024.
Phoenix Housing Market Forecast
Source: Zillow.com

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 2023. 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. 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 of 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. Central City North
  2. Garfield
  3. Kenwood / Whites
  4. Roadrunner Park / Sleepy Hollow Trailer Village
  5. W Fremont Rd / S 15th Ln
  6. Talasera
  7. Papago Peaks Village / Parkview Village Park
  8. Villa Verde / Encanto Estates
  9. Lafamilia East
  10. Green Acres Park

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 April 2023, the average rent for a 1-bedroom apartment in Phoenix, AZ is currently $1,400. This is a 6% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Phoenix increased by 2% to $1,245. The average rent for a 1-bedroom apartment remained flat, and the average rent for a 2-bedroom apartment increased by 2% to $1,700.

  • Two-bedroom apartment rents average $1,700 (a 6% increase from last year).
  • Three-bedroom apartment rents average $2,240 (a 2% increase from last year).
  • Four-bedroom apartment rents average $2,500 (a 4% increase from last year).

The “Zumper Phoenix Metro Area Report” analyzed active listings last month across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Arizona one bedroom median rent was $1,365 last month. Scottsdale was the most expensive city with one bedrooms priced at $1,870 whereas Bullhead City ranked as the most affordable city with one bedrooms priced at $1,000.

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%)

  • Casa Grande had the fastest growing rent, up 10.9% since this time last year.
  • Flagstaff saw rent climb 10.6%, making it second.
  • Glendale was third with rent jumping 9.9%.

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

  • Lake Havasu City rent had the largest monthly growth rate, up 6.1%.
  • Casa Grande rent increased 5.7% last month, making it second.
  • Prescott was third with rent climbing 4.1%.
Phoenix Rental Market Trends
Source: Zumper

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 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, and 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, and 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 of 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.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Phoenix.Consult with one of the investment counselors who can help build you a custom portfolio of Phoenix turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Phoenix.

Not just limited to Phoenix or Arizona but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Phoenix turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

Let us know which real estate markets you consider best for real estate investing! 

Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

REFERENCES

  • https://armls.com/
  • https://www.zillow.com/Phoenix-az/home-values
  • https://www.redfin.com/city/14240/AZ/Phoenix/housing-market
  • https://www.realtor.com/realestateandhomes-search/Phoenix_AZ/overview
  • https://www.zillow.com/research/zillow-hottest-markets-2021-28667/
  • https://smartasset.com/data-studies/where-housing-markets-are-cooling-off-most-2022
  • https://www.neighborhoodscout.com/az/phoenix/real-estate#description
  • https://www.zumper.com/rent-research/phoenix-az
  • https://www.phoenix.gov/housingsite/Documents/Final_Housing_Phx_Plan.pdf
  • https://www.abc15.com/news/state/as-arizona-housing-prices-rise-wages-are-not-keeping-up
  • https://metrorealtyphx.com/phoenix-real-estate-market-report-this-month
  • https://arizonarealestatenotebook.com/phoenix-housing-market-predictions-2019
  • https://www.curbed.com/2016/11/4/13518302/downtown-phoenix-real-estate-urban-planning-devleopment
  • http://capstonecapitalusa.com/the-most-friendly-8-landlord-states
  • https://www.rentcafe.com/blog/renting/states-best-worst-laws-renters
  • https://universe.byu.edu/2017/02/22/this-tiny-arizona-desert-town-is-a-retirement-mecca-for-2-million-human-snowbirds/
  • https://www.tripsavvy.com/what-is-a-snowbird-2683049
  • https://www.azcentral.com/story/news/politics/legislature/2016/07/27/airbnb-arizona-benefits/86314492/
  • https://www.bizjournals.com/phoenix/news/2017/02/15/exclusive-airbnb-hosts-in-arizona-earned-51m-in.html
  • https://www.kiplinger.com/slideshow/taxes/T006-S001-10-tax-friendly-states/index

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