Payam Raouf
Designated Broker
2/15/23
The Current Real Estate and Rental Market Conditions in the Phoenix Metro Area in February 2023
You don’t have to watch hundreds of videos on YouTube to understand the housing market in the Phoenix Metro area. Just take a look around your neighborhood to get a sense of it. There are not many “For Sale” signs, just a few here and there, unlike 2008-2011 when nearly every other house had a for sale sign in front of it.
Whether you are a renter or a landlord, you’re likely feeling the pain of the market. Rent has gone up significantly, so has the cost of acquiring and maintaining a rental property. Most renters are struggling to keep up with inflation, while landlords are passing on their increased costs to tenants, who are working two jobs to make ends meet.
This vicious economic cycle, where everyone is passing the buck continues as the Fed prints more money, causing more inflation and robbing Peter to pay Paul and vice versa. Home prices have come down slightly, but there is less inventory available. Homeowners are comfortable with their mortgage payments and reluctant to sell, while investors are unwilling to sell as they can’t replace it with another tangible asset to hedge against the hyperinflation.
Qualified tenants, who are fed up with the rent increase are now buying homes, even if it costs a bit more. Three- to four-bedroom homes under $450,000 in desirable neighborhoods are selling quickly, sometimes with multiple offers, as sellers offer incentives to buyers to buy the rate down to lower their payments. As of February 9th, 2023, there are only 6,300 single-family homes in the entire Phoenix Metro area, and just 370 single-family homes between $350,000 and $450,000 with three to four bedrooms and between 1700-2200 square feet available for sale!
On the rental side, evictions are at an all-time high, rental applications are not looking that great, with most applicants disqualified due to high debt-to-income ratios, recent evictions, bankruptcies, and other issues. Landlords are keeping rents consistent or just slightly raising them to keep good tenants in place, as it’s hard to replace them in this market. Homes are also getting older and requiring more maintenance, which has become more expensive, both in terms of material and labor.
Investors are sitting on the sideline with a lot of cash and with a falling dollar, buying a rental property is starting to make more sense. Investors are keeping a close eye on the market and are likely to get back in soon once prices level off, likely in the 3rd and 4th quarter of 2023.
My bottom line: whether you’re a renter or an investor, it’s time to buy a house. You won’t regret it in the future. it’s important to do your due diligence before buying a house, especially as schools are becoming crowded and quality of life and crime may be affected in areas where there’s a lot of new construction.
We offer services to help investors buy, rent, manage, and sell investment rental properties throughout the Phoenix Metro area. If you would like to learn more about our services, please click on the link and let us know. Thank you.
No comments:
Post a Comment