Phoenix: a modern bustling city

Indeed, Phoenix is a flourishing, contemporary city with a gold mine of real estate investment opportunities ready to be scooped up.

No longer exclusively the retirement destination it once was, Phoenix’s booming economy and fast-growing tech industry attract Millennials and even Gen Xers in droves, a trend that will continue as more employment opportunities surface.

For real estate investors, this new demographic translates to heightened housing demand, from apartments to single-family residences that appeal to young families. Investment opportunities in the West Valley offer unique potential for building an investment portfolio.

Phoenix area market growth

After several years of fast-paced growth in the Phoenix market, the upsurge is expected to slow down in 2018, although investors can still glean the long-term benefits that the Phoenix real estate market offers.

The West Valley market was hit hard in the aftermath of the housing crisis. Speculation and increased inventory took a toll as much of the pre-crash, newly built real estate went into foreclosure and sat vacant, further exacerbating the housing crisis’ impact on the city. Finally, the Phoenix real estate market saw prices begin to rise steadily between 2013-2014, and in 2017  it surged to 9.5 percent. Hower, Phoenix’s market growth is predicted to rise by only 2.9 percent (according to Zillow), but the city’s strong economy and fast-growing job market are expected to keep demand for rental housing brisk

Phoenix investment properties will continue to be affordable compared to the national index for housing affordability. The Wells Fargo Housing Opportunity Index reports that the national index is 58.3 percent for a median income of $68,000, while the Phoenix real estate market index is 65.8 percent. Compared to comparable cities in other states, Phoenix investment properties will continue to be affordable for both real estate investors and homebuyers.

Inventory in the Phoenix market may be in short supply in 2018, but real estate construction across the state will improve. A 15 percent increase in the construction of single-family rental properties in 2018 (about 32,580 new residential real estate properties) is predicted–good news for single-family rental property investors. In contrast, the Phoenix market will experience a decrease in the construction of multifamily housing (about 32 percent), which means more competition for Phoenix commercial property investors.

Property investors needn’t be discouraged about getting into the Phoenix market as there are ways to favorably negotiate a purchase in this kind of housing market.

Negotiating in a tight market

Property investors needn’t be discouraged about getting into the Phoenix market as there are ways to favorably negotiate a purchase in this kind of housing market.

More choices in rental opportunities

In 2016, Arizona legalized Airbnb in all locations, giving Phoenix investors more choice regarding traditional and Airbnb rentals. The potential income that Airbnb rentals offer appeals to many investors.

Single-family rentals are trending

In 2018, the most promising residential rental property investments in Phoenix are expected to be single-family homes. Additionally, investors can consider turning single-family rental properties into dual occupancy rentals to increase rental income.

Multifamily homes and apartment properties will remain good investment choices in Phoenix in 2018,  but low inventory may heighten the competition for investors

The Phoenix real estate market remains a viable investment opportunity in 2018. The city’s strong economy and job growth will support residential real estate property values, and investors have many strategic options in Phoenix as well.