The housing market in the greater phoenix area is turning many homeowners into investors. The chart below shows that phoenix is currently ranked 3rd in the number of homes sold in the last 9 years. This is a telling sign of what many investors already know, the inventory levels of homes priced at $350,000 and below are getting low.
|Rank||Year||Number of Sales|
Other than the low prices compared to previous years there are more reasons people are choosing to buy investment properties.
- Buyers are seeing opportunities to make their rental properties “pencil”. In other words they can rent out their investment home to someone for as much or more as it costs them to maintain the property(mortgage payment, HOA, insurance, etc). Being cash positive allows investors to make their second home not only an investment but also another source of income.
- There are multiple private money funds of $1 – $300 million that are buying up 1-10 homes per day in the greater phoenix area. These are cash buyers investing smart money back into the AZ real estate market. This is lowering the inventory and will in turn drive up prices.
- Many smaller investors are following the smart money and buying homes in the phoenix market. While they may not be cash buyers lending practices have eased slightly and investors with 20% down are finding it much easier to finance.
Because of the still stringent lending conditions it is tough to finance a house unless you are a cash buyer. It is important to select an agent that has experience with investors when choosing someone to represent you. The bottom line is that while inventory is drying up due to the increase in home sales, it is a great time to buy an investment home at a low price with a low interest rate.