• Built between 1975-2004 • 1,400-2,000 square foot range • Three bedrooms, two bath homes
the table. Unlike the Great Recession which was triggered by real estate, some are speculating real estate may be our way out of this recession. But unlike when real estate saved the economy after the dot-com bubble, prices are at far less affordable levels, leaving less room for growth. REAL ESTATEAND INVESTOR FRIENDLY If having Wall Street ibuyers choose Phoenix as home base isn’t enough proof that it’s investor-friendly, look to Arizona’s progressive and business-friendly stance on short-term rentals. There is some noise in Phoenix around the affordable housing conversation and short-term rentals. However, Scott Shatford, CEO of AirDNA, says that cities without highly restrictive rules on short-term rentals at this point are unlikely to get them. For now, Phoenix investors need only see Ordinance G-6653 which requires registration, emergency contact information, and to follow usage rules. Other cities are greatly restricting use or banning vacation rentals out- right so Phoenix poses far less risk, comparatively. Interestingly, AirDNA data shows that the hottest markets in Arizona are outside of the Phoenix area within a three- hour radius.
In the shareholder letter, Zillow stated they are spend- ing around $16,000 on repairs for an average of 5 percent of the purchase price, which amounts to little more than paint and carpet. Another way for investors to stand out is by doing better quality rehabs. Paint and carpet updates work in an upmarket but listings will linger at first sight of the market softening. Another opportunity is for investors to incorporate the ibuyers into business by going after deals with people problems (probate, hoarder homes, and divorce). Ibuyers will increasingly focus on speed and volume. Investors can wholesale deals to ibuyers after closing the property and solving the immediate people issues and by cleaning out the property. The key is paying close attention to the “buy box” of your local ibuyer. It can change drastically in each state and city. PHOENIX FORECLOSURES As to the concern for foreclosures related to Covid, it’s too early to tell. The Phoenix Association of Realtors is reporting an annual decrease in listings of -27.9 percent with a 1.26 months’ supply of homes. Local association reports suggest that sales may match that of 2019 despite a slow April and May. An increase in foreclosures won’t necessarily impact price. The actual impacts of Covid-19 will be challenging to predict and measure until we have a clear path of pan- demic containment and treatment. An extended pandemic with more shutdowns will do more economic damage and potentially increase foreclosures. The County of Maricopa’s foreclosure rate has been on a steep decline since 2011. While it’s expected the market will see pre-Covid foreclosures push through as soon as federal, state, and local guidelines allow, don’t expect post-Covid foreclosures until Spring 2021. Be leary of headlines. A 1,000 percent increase of foreclosures from 25 to 250 makes a great news headline, but Phoenix investors know better. Federal, state and local officials have made it crystal clear more stimulus money is coming. We don’t need to look much past the playbook of 2008 to know that the government will do it’s best to ensure people stay in homes. Forbearance, term extension, lower interest rates, helicopter cash, and homebuying credits are all on
ARIZONA VACATION RENTAL HOT SPOTS
MARCH ‘20 VS. AUGUST ‘20
JULY ‘20 VS. AUGUST ‘20
AZ CITY
AZ CITY
Lake Havasu City
282% Fountain Hills
69% 43% 37% 35% 34% 31% 27% 25% 25% 23%
Payson
278%
Cornville
Greer
277% Green Valley 203% Munds Park
Lakeside
Bullhead City
198% 194% 192% 188% 182% 175%
Kingman
Parker Bisbee
Pine
Overgaard
Lakeside Sedona Surprise
Sedona
Munds Park
Williams
Source: AirDNA.
Whether or not people decide to relocate to these va- cation destinations after the pandemic ends permanently will be something to watch in the year ahead as compa- nies explore if remote work is a fad or our new normal. Phoenix also just announced that as of September 2020, signing up to be in the Section 8 Housing Program will get an investor a $500 signing bonus. The $500,000 funding for the program comes from the CARES Act and
INVESTOR REV I EW : : 13
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