Thursday, September 15, 2016

Should You Invest In Arizona Real Estate?

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Quick Hits: If you’re planning to buy a home in Phoenix, Flagstaff or Prescott, do it now, because prices are going up for the next few years. Investments in single-family rental properties have good potential mainly in Phoenix. Apartment developments have the best potential in Phoenix, where splitting homes into rental units is also attractive, and in Tucson. Mortgages and construction loans have average risk. Best bets for investments in retail are Phoenix, especially the southeast suburbs; worst bets are Tucson and Prescott.
Investing in Arizona no longer means dubious retirement projects in the desert – a kind of Florida West with sand instead of swamp. You can find those too, if you like taking a flyer, but Phoenix and Tucson have grown up and offer investors a range of  possibilities. In addition to the big cities, Prescott does cater to retirees, Flagstaff has a younger demographic, and Yuma has a heavily immigrant population; all have different housing needs.
The strongest economic growth, and therefore strongest demand for housing, is in Phoenix, where jobs are being added at twice the national rate many of them in healthcare, retail, and the large finance sector. Job growth has also been strong in Prescott, mostly in the retail and healthcare sectors as you would expect from the retiree population. Growth in Tucson, on the other hand, has recently been slow. Flagstaff depends heavily on the cyclical tourist trade.
Home prices in all Arizona markets rose and fell sharply in the boom and bust; but afterwards prices in Phoenix – and somewhat in Prescott – went through a mini-boom of speculation in foreclosed properties. It looks like those have now been flushed through the system, so we can take at face value the recent price increases – strongest in Phoenix, Flagstaff and Prescott, weaker in Tucson and Yuma. I expect Phoenix prices up at least 25 percent over the next three years, which means you shouldn’t wait if you plan to buy there. Prices have been strongest in Phoenix itself, slightly weaker in the southeast suburbs.
Flagstaff, Tucson and Phoenix have a high proportion of renters, almost 40 percent, but because home prices in the former two are high compared to rents, investing in single-family properties to rent them out is most feasible in Phoenix – where the ratio is much more favorable and where housing needs encourage splitting single-family homes into multiple rental units. The relatively lower pay in the growing retail and healthcare sectors will expand renting in future years.
Mortgages are a good investment right now. Because home prices will keep rising the next few years, the equity cushion for new mortgages will grow quickly; yet prices are in balance with local incomes, so the risk of default will stay average. Construction loans also will have average risk in the growing markets, especially Phoenix, where I expect 60,000 new single-family homes built over the next three years and 60,000 apartments. In Prescott I expect a modest 5,000 homes built and in Tucson 5,000 apartments. In Flagstaff and Yuma I expect less than a thousand new housing units, mainly apartments.
Because of the rapid population growth, investments in retail stores and restaurants are favorable in Phoenix; the suburbs in Pinal County are greatly underserved for both. Such investments in Flagstaff face stronger competition and the cyclicality of tourism. The retail sector has been flat in Prescott and has actually shrunk in Tucson. The large growth of finance and healthcare in Phoenix will probably call for more office space.

Should You Invest In Arizona Real Estate?
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Tuesday, July 5, 2016

Blackstone Tenants Get a Shot at Buying Their Rental Houses

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Dear Subscribers, If you are planning to take some profits off the table or can no longer afford hanging on to your rental propertiy(ies), this could be the right opportunity to sell it.

Home values have substantially gone up in Arizona since it bottomed out in 2010. In some areas we have surpassed the values at the height of the market in 2005!!!

There are approximately over 300,000 rental properties in Phoenix Metropolitan Area. Majority of them are held by large Equity Funds. They have now quietly started taking some profits off the table by selling to our #1 buyers, the tenants. This trend will accelerate next year and as fierce competition amongst these equity funds heat up, they are going to flood the market with thousands of unsold inventory driving prices back down again.

If you are planning to sell your property, you should price it according to the market and offer the right terms to avoid getting caught at the exit. We have years of experience selling rental properties with or without tenants in place and short sale.

Blackstone Tenants Get a Shot at Buying Their Rental Houses
BY: Heather Perlberg
July 5, 2016 

Firm’s Invitation Homes unit is selling in Arizona, California

Single-family landlords have been losing renters to home buying

Melissa Suniga and her mother had been renting a three-bedroom Phoenix house for less than a year when their landlord, Blackstone Group LP’s Invitation Homes, gave them the chance to buy it.
Suniga, a 40-year-old childcare worker, used her security deposit and $2,000 she’d saved from her income-tax refund, along with a county grant and a credit from Invitation Homes that together provided her with $10,600 more for her down payment and closing costs. She expects to complete her purchase of the $150,000 house this week.
“When I started renting, I thought, ‘I wish I could buy this home,’” Suniga said in an interview.
U.S. landlords who built rental businesses by buying homes en masse are now consolidating and streamlining their operations, in part by selling for a profit properties that have soared in value or no longer fit their business models. Invitation Homes is the first of the large rental companies to give residents a shot at owning their houses, seeking to benefit from having its own pool of ready buyers who are constrained by a market starved for affordable homes.
Blackstone has amassed about 50,000 rental houses in the past four years. While Invitation Homes is still buying selectively, spending about $5 million a week, it expects to cull about 5 percent of its properties annually, Chief Executive Officer John Bartling said.

Staying Put

Selling rental homes to tenants is a way for investors to make more money than they would selling in bulk, and saves them the costs of renovating and carrying the properties until they sell on the open market. It’s also a way to help people stay put, keep their kids in the same schools and stabilize neighborhoods, according to Bartling.
“This is an important part of the maturation of the industry and for Invitation Homes as we grow over time,” he said in an interview.
About 25 percent of Invitation Homes renters who move out each year are leaving to become buyers, according to the company. That’s similar to what the industry’s other large firms are experiencing. Colony Starwood Homes has reported losing about 23 percent of departing tenants to homeownership, and American Homes 4 Rent has said its figure is about 30 percent.

American Homes 4 Rent, the No. 2 single-family landlord, with about 48,000 houses, didn’t respond to requests for comment about whether it would be selling homes to tenants. Colony Starwood, the third-largest, with about 31,100 homes, declined to comment, spokeswoman Caroline Luz said.

Homebuying Option

Selling homes to renters is “an evolution of the business model,” said Jade Rahmani, a Keefe Bruyette & Woods Inc. analyst. “The differentiating factor in this industry is they can sell to an owner-occupant as well as an investor.”
Renters may have better luck buying a home from their landlords than venturing into the open market. Inventory is tight, and home prices nationally are up 32 percent since the 2012 low -- and have risen even more in areas hit hard by the housing crash, with increases of greater than 50 percent in Phoenix and Miami from their troughs. And soaring rents are causing some tenants to view homeownership as more economical.
Invitation Homes started selling houses to renters in Phoenix and Sacramento, California, this year, with plans to expand the program, to be called “Resident First Look,” in all 14 of its markets across the U.S. in the next few months.
The company’s decision to sell a home is based on a variety of factors, including the concentration of properties it wants to have in individual markets, prices and whether it wants to reallocate funds in other parts of the country, Bartling said.

Rising Prices

Invitation Homes bought Suniga’s house for $83,000 in 2013, according to property records. Values in Phoenix have since risen about 25 percent, and rents in the area have climbed 15 percent in the same period.
Now, Suniga is buying the renovated place for $150,000 with a loan from the Blackstone-owned Finance of America Mortgage LLC. A bankruptcy from more than a decade ago, along with a past sale of a home for less than what was owed on it, had raised flags with other lenders Suniga talked to, even though she’s brought her credit score up to 660, she said.
While Invitation Homes said its renters-turned-homebuyers are free to use any lender they want, the company is working with a small number of mortgage providers that are more familiar with the new buying program, including Finance of America.

Similar Payment

Suniga’s monthly mortgage payment will be $920, about $65 less than her rent, she said. Her down payment wouldn’t have been large enough without the help of the Maricopa County, Arizona, homebuyer-assistance program, which required both her and her mother to take an eight-hour online course. She also received a $5,000 credit from Invitation Homes for closing costs and used her security deposit toward the down payment.
That kind of help might lead to questions from lawmakers and regulators in Washington, according to Isaac Boltansky, an analyst in Washington with Compass Point Research & Trading LLC.
“There’s inherent skepticism in D.C. regarding Wall Street’s motivations in the mortgage-finance market,” he said. “Novel forms of credit access are going to be scrutinized closely even though they purport to increase homeownership.”
Some housing advocates have pressed rental companies to allow renters the opportunity to buy their homes before properties are sold to investors.

‘Help Households’

“A first look for renters, as long as the renter can afford the home and purchases it on fair terms, could help households get on the road toward building equity and limit turnover in the neighborhood,” said Sarah Edelman, director of housing policy at the Center for American Progress in Washington. “It’s important, though, that they shop around for a mortgage.”
Smaller investors, such as Axonic Capital LLC, have been offering renters the chance to buy their homes for years.
“We definitely see it as one of the best ways to sell, because there’s no down time or rehab cost between tenants,” said Jonathan Shechtman, portfolio manager for residential strategies at the $2.7 billion investment firm.

More Flexibility

Like Invitation Homes, Axonic -- which owns fewer than 1,000 properties, all in Florida -- has more flexibility on timing when selling to existing residents, many of whom are getting low-down-payment loans insured by the Federal Housing Administration, Shechtman said.
Suniga, the Blackstone tenant, is planning to replace some carpeting and upgrade the kitchen cabinets once she officially owns the rental home she had thought was unattainable.
“I’m thankful for the opportunity,” she said. “It’ll be a shock until I know it’s mine.”


Monday, June 6, 2016

Metro Phoenix housing market has best month in a decade.

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  Catherine Reagor, The Republic | 10:19 a.m. MST May 27, 2016

Foreclosures low, home building high, prices affordable and buyers are moving to the area.

April just might have been the best month for metro Phoenix’s housing market in a decade.

A look at key indicators and some national rankings show why the Valley’s housing market appears to be stronger than it’s been since the boom and crash.

Foreclosures fell to the lowest level since 2006. Home building continued to rebound. Phoenix kept its spot as one of most affordable big metro areas for home buyers. And a national moving survey shows the Valley is one of the top 10 U.S. areas where people are moving.

Also, many of the buyers needed for the Valley’s housing market to finally fully recover are here.
An April Street Scout survey of Valley home buyers and sellers found Millennials and boomerang buyers who lost houses to foreclosure during the crash are buying metro Phoenix homes at a pace the market hasn’t seen before.
  • Home sales in metro Phoenix climbed to 9,041 in April, an almost 8 percent jump from last April, according to data compiled for this column by Arizona housing expert Mike Orr of The Cromford Report. Condominium sales reached 1,637 last month, up 1,514 from April 2015.
  • The Valley’s median home price rose to $235,000, up from $215,000 a year ago. The median condo price reached $146,500 last month, compared with $142,000 a year ago.
  • Banks foreclosed on only 231Phoenix-area houses in April, the lowest level since December 2006, according to The Information Market.
  • Home building in the Valley is up 25 percent from last year’s pace, according to RL Brown Housing Reports.
  • Despite home-price increases, metro Phoenix is still the eighth most affordable big U.S. metro area to buy a home, according to the latest quarterly ranking from national mortgage firm The Valley has held that spot for the past year.
  •  And finally, moving company U-Haul’s annual survey for the most one-way rentals in 2015 came out this week. Metro Phoenix ranked 10th nationally for the most popular place for people to move.
Despite the upbeat signs for the housing market, Orr is careful in how he describe its current status.
He told me the Valley's housing market is a bit "complicated" now.

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Saturday, March 12, 2016

Inventory for sale is low, demand is high and prices are holding steady but rents are going up.

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BY: Payam Raouf
Designated Broker

Inventory for sale is low, demand is high and prices are holding steady but rents are going up.

Market is moving at a moderate pace. More tenants and first time home buyers are purchasing homes. Cali-vestors are back at it as they get more bang for their buck in Arizona. Not much flipping is going on. Margins are not simply there.

There is a shortage of rental homes throughout the valley. Rents have gone up considerably and homes prices are holding steady in most areas. It looks like market is leveling off.

Multi-Family sale prices have skyrocketed. As they are a more affordable alternative to single family home rentals.

Inventory of single family Homes for sale is low. We are hovering around 18500 (3/12/2016) active homes for sale on MLS. For a city the size of Phoenix Metro, normal is around 35000. This has made the condo prices go up substantially.

Many investors are holding on tight hoping the shortage is going to help the rents and home prices to  higher.  One good indication that home prices have reached their peak is when condo prices per sq ft get close to home prices in the same neighborhood.

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How I see it in the trenches here on the front lines. Arizona Real Estate/Rental Market Update.

  Call For a Free Property Management Quote:  888-777-6664 Click Here Payam Raouf Designated  Broker 11/26/2021 I have come to the conclusio...