As we see Arizona real estate market thriving, the Metro Phoenix is expected to be among the top five housing markets during 2020. 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. Phoenix has been one of the highest appreciating communities not only in Arizona but in the nation as well for the latest quarter of 2019. Phoenix home prices were up by roughly 7% over the last twelve months. Despite the increase in property prices, the Phoenix real estate market remains much more affordable than other places.
Many may be surprised to hear that the Phoenix housing market is back on the recommended list for investors. The national economy is super strong and the number of people moving into Phoenix is finally strong again after tanking during the Great Recession. Phoenix remains the biggest city of Arizona and the state’s capital. 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, though, is much larger than Phoenix – 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. There are a number of other reasons to consider investing in the Phoenix real estate. Prices are up 17.8% since two years ago and 145% since prices bottomed out in May 2011. On the other hand, Phoenix home prices are now only back to where they were at the top of the real estate bubble in 2006, 12 years ago.
If you take into account inflation, however, Phoenix home prices are still 20% below the inflation-adjusted peak in 2005. Current trends fairly predict that the Phoenix home prices and real estate appreciation rates in 2020 are very likely to be the same as in 2019. Phoenix real estate appreciation rate in the latest quarter was around 2.25%. However, it is quite unclear whether it would remain steady or not. Looking at the positive forecast, the annual appreciation rate is predicted to be between 8% to 9%.
You can either choose to invest in your future, or market your home to potential buyers. Let’s find out more about it. Please note that there are many variables that can potentially impact the value of a home in Phoenix (or any other market) and some of these variables are impossible to predict in advance.
Phoenix Real Estate Market Forecast 2020
What are the Phoenix real estate market predictions for 2020? Let us look at the price trends recorded by Zillow over the past few years. Since 2015, the median home price in Phoenix have appreciated by 47.1% from $179,000 to $263,253. In the past year, the Phoenix was a hot seller’s real estate market throughout, the prices increased by 7.1%. The latest Phoenix real estate market forecast is that home prices will continue increase by 5.2% in the next twelve months.
The latest real estate data from Zillow shows that the current median home value in Phoenix is $263,253. Phoenix is currently a seller’s real estate market – which indicated that the demand from buyers exceeds the supply of homes for sale. Pricing is trending higher and is more attractive for sellers in the current housing cycle.
Here is the Phoenix, AZ real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 5.2% till Jan 2021.
The median list price per square foot in Phoenix is $176, which is higher than the Phoenix-Mesa-Scottsdale Metro average of $169. Zillow reports that 13.2% of the listings in Phoenix had a price cut in Jan 2020, which is a good thing for buyers. The median price of current listings in Phoenix is $289,900 and the median price of homes that have been sold is $250,600. The median rent price in Phoenix is $1,475, which is lower than the Phoenix-Mesa-Scottsdale Metro median of $1,545.
Phoenix Housing Market Forecast 2019 – 2021
The Phoenix housing market forecast for the 3 years ending with the 3rd Quarter of 2021 is also positive. The accuracy of the Phoenix housing market trend prediction is 74%. Accordingly, LittleBigHomes.com estimates that the probability for rising home prices in Phoenix, Arizona is 74% during this period. If this Housing Market Forecast is correct, home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
Check this page each quarter for updates to the Phoenix Housing Market Forecast.
Phoenix Housing Market Trends
We shall now discuss some of the most recent housing trends in the Phoenix area and compare it with past couple of years. We shall mainly discuss about median home prices, inventory, economy, growth and neighborhoods, which will help you understand the way the local real estate market moves in this region. Phoenix has been one of the hottest real estate markets in the country for many years. Trulia has currently 4603 resale and new homes for sale in Phoenix, AZ, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The median price of sold homes in Phoenix housing market is $257,500 and homes are selling for about $172/sqft.
Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate. Single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units. With 2020 being, theoretically, in the middle of a boom, there’s still 4 years for residential construction to surge. Most likely, a housing shortage will remain in 2020, keeping home prices high.
Single family homes continue to drive the Arizona real estate market. As compared to 2018, single family homes grew by roughly 4% in 2019. Particularly, previously-owned single family houses compromise the majority of residential sales in the Arizona real estate market- approximately 80% of all sales. Annually, the number of previously-owned single family homes are three to four times greater than new single family home sales. As a matter of fact, the Phoenix real estate market is of the top performing, not only in the Arizona real estate market but nationwide as well.
As per the real estate company called Neigborhoodscout.com, the median house price in Phoenix is $235,414, which indicates that home prices in Phoenix are well above the national average for all cities and towns in the United States. Three and four bedroom single-family detached are the most common housing units in Phoenix. Other types of housing that are prevalent in Phoenix include large apartment complexes, duplexes, row houses and homes converted to apartments.
Currently, there are 2971 single family homes for sale in Phoenix, AZ on Zillow. Additionally, there are 824 single family homes for rent in Phoenix, AZ. Under potential listings, there are about 2 Foreclosed and 593 Pre-Foreclosure homes. These are the delinquent properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
In the past month, 1786 homes have been sold in Phoenix, AZ on Redfin.com. In addition to houses in Phoenix, there were also 721 condos, 489 townhouses, and 84 multi-family units for sale in Phoenix last month. The median listing price is around $330,000. According their statistics, the Phoenix housing market is very competitive. Homes in Phoenix receive 1 offers on average and sell in around 41 days.
The average sale price of a home in Phoenix was $275K last month, up 7.3% since last year. The average sale price per square foot in Phoenix is $175, up 10.1% since last year. A hot listing in Phoenix can sell for around list price and go pending in around 17 days.
Here is the latest Phoenix housing market data for the month of Jan 2020 from Redfin.com. The sale to list price ratio shows us that it was a trending more like a seller’s real estate market in the past month.
Phoenix Real Estate Market Trends
|Median List Price||$330,000|
|Avg. Sale / List||98.2%|
|Median List $/Sq Ft||$189|
|Median Sale Price||$274,000|
|Median Sale $/Sq Ft||$175|
Analyzing real estate data from multiple sources gives us a much broader perspective of the direction in which a market is moving. There are currently 5704 homes for sale in Phoenix on Realtor.com. The asking price of single family homes can start from $130,000 and can go up to $9.9M for a luxury property located in Arcadia neighborhood in the city of Phoenix, AZ. Arcadia is a popular neighborhood with the median price of $1.08M. Camelback East has a median listing price of $489.9K, making it the most expensive neighborhood in Phoenix. Maryvale is the most affordable neighborhood, with a median listing price of $214,900.
Phoenix has a mixture of owner-occupied and renter-occupied housing. There are currently 1919 rental properties in Phoenix and their rent prices range from $340 to $50K per month. The median rent price in Phoenix is $1,590. According to Realtor.com, 611 homes were newly listed on the market within the last week. There are 573 new construction single family homes for sale in Phoenix within a price range of $147,000 to $8.9M. You can find affordable new construction homes in located in North Phoenix neighborhood. North Phoenix neighborhood has low crime risk and a median price of $351,000.
According to their data, in January 2020, Phoenix housing market was a seller’s market, which means there were more buyers than there were active homes for sale. It also means that the market is very competitive. Ideally a buyer would prefer a sale to asking price ratio that’s closer to 90%. In Phoenix, the sellers have managed to hold good leverage in these negotiations in the past month. On an average, they could sell homes for 99.09% of the asking price. A seller would always prefer scenarios which can yield a ratio of 100% or higher.
In January 2020, the median list price of homes in Phoenix, AZ was $319K, trending up 6.4% year-over-year. The median listing price per square foot was $184. The median sale price was $273K. Typically, a market that favors sellers has less than 6 months of supply, while more than 6 months of supply indicates an excess of homes for sale that favors buyers. As per the current trends, the Phoenix is all set to remain a seller’s market in next 12 months.
In a seller’s market, homeowners want to know if they should sell their home now, or wait a bit longer in order to get top dollar. On average, homes in Phoenix, AZ sell after 57 days on the market. The trend for median days on market in Phoenix, AZ has gone up since last month, and slightly down since last year.
The median list price in Phoenix, AZ is $403,995 on Movoto.com. The median list price in Phoenix went up 3% from January to February. Phoenix’s home resale inventories is 1,914, which decreased 11 percent since January 2020. The median list price per square foot in Phoenix is $204.
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. Some of the popular neighborhoods 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.
Here is a snapshot that shows the median home values in the some of the popular neighborhoods of Phoenix.
Phoenix, AZ Foreclosures And Bank Owned Homes Statistics 2020
According to Zillow’s foreclosure statistics, in Phoenix 0.4 homes are foreclosed (per 10,000). This is lower than the Phoenix-Mesa-Scottsdale Metro value of 0.5 and also lower than the national value of 1.2. The percent of delinquent mortgages in Phoenix is 0.6%, which is lower than the national value of 1.1%.
With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Phoenix homeowners underwater on their mortgage is 7.4%, which is higher than Phoenix-Mesa-Scottsdale Metro at 7.1%.
|Total No. of Foreclosures in Phoenix||588 (RealtyTrac)|
|Homes for Sale in Phoenix||2489|
|Median List Price||$285,000 (1% rise vs Dec 2018)|
There are currently 588 properties in Phoenix, AZ that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 2,489. In January 2020, the number of properties that received a foreclosure filing in Phoenix, AZ was 16% lower than the previous month and 43% lower than the same time last year.
In Phoenix, the zip code with the highest foreclosure rate is 85043, where 1 in every 1698 housing units is foreclosed. 85033 zip code has the lowest foreclosure rate, where 1 in every 2395 housing units becomes delinquent.
Is Phoenix a Good Place to Invest In Real Estate?
Now that you know where Phoenix is, you probably want to know why we’re recommending it to real estate investors. Investing in real estate is touted as a great way to become wealthy. Many real estate investors have asked themselves if buying a property in Phoenix is good investment? You need to drill deeper into local trends if you want to know what the market holds for the real estate investors and buyers in 2020..
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 look at the state of the Phoenix real estate market and the factors driving the property market short and long term
1. The Major Wave of Renovation in Downtown
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.
2. The Dozen Other Development Opportunities
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.
3. The Large Student Market
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 a number of 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.
4. The Large Tourist Population
There are more than 200 of these golf courses in Arizona, but most are located in and around the Valley of the Sun. There are a number of 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. This makes Arizona a great place to buy a single family home or condo to rent out to tourists.
5. 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.
6. The Growing Retiree Market
The same things that attract many people to Phoenix as snowbirds causes 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.
7. It 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.
8. It Has Low Taxes
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.
9. You Can Find Cheap Property across the Market
While California and Florida are seen as hot real estate markets, one of the major attractions of the Phoenix real estate market is the affordable real estate. The median home is worth $177,000. The prices in the Phoenix real estate market are a little higher. Homes in the Phoenix housing market are approaching the 2006 record. But before you panic, remember that you have more than a decade of inflation to erode the value of that $300,000 price tag compared to what it was worth at the peak.
Just for the record, that puts the median Phoenix home’s value at $260,000. That’s still cheaper than a starter home in coastal California. Don’t forget that the large retiree market means there is actually 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.
10. Value-Added Enhancements Are Frequently an Option
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.
Investing in Phoenix Real Estate or Not: The Conclusion
Maybe you have done a bit of real estate investing in Phoenix but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. 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 here. 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.
A good cash flow from Phoenix investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding a good Phoenix real estate investment opportunity would be a key to your success. If you invest wisely in the Phoenix real estate, you could secure your future.
As with any real estate purchase, act wisely. Evaluate the specifics of the Phoenix housing market at the time you intend to purchase. Hiring a local property management company can help in finding tenants for your investment property in Phoenix. If it is your first time to invest in Phoenix real estate, then you would have to be aware of common beginner’s mistakes. Beginners would usually follow the media, buy a property and wait for its value to increase. This could be risky. Real estate investing requires research. We recommend doing your own research or hiring a real estate investment specialist for guidance.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable. 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 area, 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.
The aim of this article was to educate investors who are keen to invest in Phoenix real estate in 2020. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor.
Other Good Markets To Invest in Real Estate in 2020
Similarly, Charlotte housing market forecast2020 is that it is going to be a hot investment destination for new real estate investors. Charlotte is the largest city in North Carolina. The city proper is home to more than 800,000 people. The metropolitan area is even larger – home to roughly two and a half million people. It is one of the country’s fastest growing metro areas, and it was the second fastest growing city in the southeastern United States. Only Jacksonville, Florida was growing faster between 2004 and 2014. One advantage to living in a big city like Charlotte is the constant demand for homes.
Buying a home in Charlotte is a better investment, depending upon several factors. There are so many major companies and professional sporting events that people will always be interested in residing here. Therefore, interested investors aren’t likely to allow the listing prices to get to low before they swoop in and take advantage.
Another hot market for 2020 and upcoming years is going to be the Miami real estate market. The Miami real estate market offers diverse opportunities to real estate investors, allowing you to choose which rental markets you want to cater to and profit from. According to a report published by Zillow in Dec 2017, Miami was the country’s fourth most valuable housing market. Trailing only Los Angeles (total value of $2.7 trillion), New York (2.6 trillion), and Washington (996.7 trillion), the total value of Miami’s housing market is an estimated 864.2 billion, which represents a solid 4.7 percent increase year over year.
*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 through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
Granny flats / ADUs
15 redevelopment sites
State of Phoenix
Full time snowbird / permanent retirees
Market Trends And Forecast