We haven’t seen 80% inflation yet. We have not seen 21% interest rate yet. Rental Market Evaluation 4/26/2023 in Phoenix Metro Arizona.

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By Payam Raouf
Designated Broker

We have had it too good for too long. No one wants our money (dollar) any more. We might as well print it on the toilet paper. A box of 8x11 copy paper at Staples was $89 today. We used to buy it for $29 two years ago. I bought the last box on sale for $59. 

We haven’t seen 80% inflation yet. We have not seen 21% interest rate yet. It is not quite around the corner. I have heard from some experts it’s 5 to 7 years away. It is a work in progress and not going to happen overnight.

Saudi Arabia is not dropping the petrodollar yet, but their activity suggests they might be considering other options. Saudi Arabia might be the keystone in the petrodollar too, and if for example, they begin to trade oil in yuan, this may cause a domino effect, and the other members of OPEC might follow suit. 

Homes that are $400,000 now could be $1,000,000 and then $2,000,000 and so on and a $2500 rental will be $5000 and $7500 accordingly by then (2027-2029). 

Of course, average household income will have doubled by then as well and is going to be around $150,000 to $200,000 per year. I look at credit applications all day. Average household income has increased substantially in the last two years and so have the rents. A $1200 rental is now $1700 and a $1700 rental is now $2400 just within the last 2 years and I don’t see most renters having any difficulty paying it.

Folks, I am buying rentals as we speak. I put my money where my mouth is.  That’s how you can keep up with a runaway inflation. Everyone needs a roof over their head. They will find a way to pay.

If I were a tenant, I would get off my butt right now and start looking for a house to buy today.

Institutional landlords are building multifamily and bungalows for rent everywhere you look in phoenix metro area. They want your money and will keep you a renter for ever if they can.

New home builders are literally giving them away.  It was on the news today that you can buy them cheaper than resale. Realtors receive emails from new home builders constantly that they are offering substantial discounts up to $90,000 on some standing inventories and even buy the rate down to make them more attractive. They are in the business of building homes. They sell more houses with less profit they get the same result as if the sell less at higher prices. EX: email from ******* Homes April 14, 2023: Our HUGE incentives will continue through this weekend!!  Please do NOT miss out on ‘up to’ $90,000 incentive :-) WOO-HOOOOOOO!!  

 

Banks are making money hands over fists. Did you see how much profits the bank made in the last quarter? They also go out of business if they don’t give loans. They will find a way to take your money. Don’t worry. Either you are paying rent or a mortgage. It’s your preference.

They say I write this because I am a Realtor and are pumping it to sell more homes. That’s fine I don’t care what they say. I am very blessed with a lot of clients. I am in rental management business. I see how investors and tenants are taking advantage of this market.

There goes not a month that I don’t get a few phone calls from tenants that we are giving our notice to move out, we bought a house and from investors asking where is a good place to buy and what rent they should expect to get.

As of today 4/26/2023 at 1: 52 PM, there is only 515 resale homes on MLS in the entire Maricopa county with 4.5 million residence with the following description: detached single family homes between $350,000-$450,000 with 3 to 4 bedrooms and more than 2 baths , 1700-2500 sq ft, build after year 2000 with no pool. These seem to be the most desirable homes to buy in the valley.

Once the new homes standing inventory runs out the resale home prices will go back up even higher. We have seen a substantual price increase in March 2023 already in Metro Phoenix 

Life is beautiful. Enjoy it and God Bless.

https://finance.yahoo.com/news/home-prices-rose-more-than-previously-thought-in-the-first-three-months-of-2023-202355995.html

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Rental Evaluation

Disclaimer: Please do your own due diligence. This is only my personal observation and opinion. Do not make a decision solely on the content of this blog.

How is the rental Market in Arizona? April 1st 2023. Market is moving fast.

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Payam H. Raouf
Designated Broker
Arizona Property Management & Investments

As I had predicted in the last blog, buyers are back and both the new homes and resales are selling faster than ever! Inventory has gone up a bit but so are the number of homes under contract. New home builders are offering unheard of incentives some over 20% to lure the buyers back in. Incentives are so aggressive that even investors are getting back into the game. I just negotiated an additional $4000 discount on top of the $63000 incentive a new home builder was offering. Deals are to be had. Resales have to compete with new home builders, some are slashing prices by up to 10%, some are offering incentives towards closing costs and buying the rates down.

Tenants are out there buying homes. All they have to do is walk into a new home builders show room, they come out with a signed contract putting their notices in to move out. New homes builders are running out of spec homes.

If you are an investor, it is time to move. Cash here is not trash. It gets you a ton of discounts. Just make sure the builder will allow rentals in that community, some exclude rental for a year some other don’t allow rentals below 6 months.

At the same time, investor friendly resale homes with 3 to 4 bed rooms, 2 baths, 2 car garage, 1700-2300 sq ft, year 2000 and newer and no pool between 350,000 to $400,000 are selling fast. It’s the new home buyers' dream home but again cash talks here too. Cities like Surprise, Peoria, Avondale, Good Year, Glendale, some parts of Phoenix in the west valley are the most desirable areas to buy a house as an owner occupied or investments. Rents in $1800-$2400 are the most desirable rentals. You can get decent tenants who will stay for a few years before they can qualify to buy their own.

We are seeing multiple credit applications on our rentals again. What you have to watch out for is not the credit scores as much as the debt-to-income ratio and the job stability.

Pets are the victim of the rental market. We encourage our investors to buy pet friendly properties. You can charge either extra deposit or more rent per month or both as them leaving a member of their family behind excludes some of your best renters.

If you are buying a new house make sure to look at the taxes and other charges. Even if they impos a special assessment, take that into consideration in the overall picture of how it is going to affect your bottom line.

(what is Improvement District tax? An Improvement District (ID) is a means to provide financing of infrastructure improvements (i.e, water and sewer lines, pavement, sidewalks) by imposing a special assessment on each property within the former district. The process can be initiated by property owners or developers.)

As we speak today 4/2/23, the number of active homes on Realtor's Multiple Listing Services (MLS) between $350,000 to $600,000 is 5,227 and 3,904 are under contract.

Back to rentals: tenants are staying put renewing their leases for one more year waiting for the buying opportunity. Landlords are either reducing the rents by a small margin or keeping them the same and if increase only by less than 3%.

Mortage rates are going down. You are going to see more sellers put their homes on the market as it is bringing the buyers back out. There are so many new spec homes to be had, they will run out fast and we will be back at the resale market shortage again. 

Falling dollar and collapsing banks one after another is another subject for another time. Things don’t look that promising in short. Watch a few clips on youtube you get the idea.  For the time being, it seems investing in real estate is a better option. 

I will keep you posted again by the middle of the April as things are progressing daily! Thank you for reading my blog. 

READERS MUST DO THIER OWN DUE DELIGENCE. THIS IS STRICTLY MY PERSONAL OBSEVATION AND OPINION. 

 

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