Think-Realty-Magazine-May-June-2019

PHOENIX MSA YEAR-END MEDIAN SALES PRICES

$300,000

252,500

249,850

250,000

$250,000

231,000

218,000

200,000

194,500

$200,000

185,000

174,184

137,991

$150,000

125,000

125,000

110,000

$100,000

$50,000

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2006

2007

2008 2009

2010

2011

2012

2013

2014 2015

2016

2017

2018

Stapp noted that lifestyle decisions are creating demand for housing from both Millenials and seniors who are looking to downsize. Unfortunately, neither of these groups wants to live in the periphery. “They don’t want to give up on walkable places and access to amenities. One of the things we see happening is the urbanization of our suburbs,” he said. According to his report, Stapp esti- mates that demand for new housing units in Phoenix totals roughly 28,000 units per year with 8,000 to 9,000 of those being multifamily and about 20,000 being single-family homes. For 2019, however, he estimates the total number of combined residential permits to total 33,324, with sin- gle-family permits accounting for the bulk of the increase. “We have a very low inventory of ex- isting homes. Somewhere around four months. If you’re looking for homes in the median price range – $300,000 and below – there’s almost nothing on the marketplace. That’s where our problem is,” Stapp explained. One possible solution to address

the affordability issue in Phoenix is through what Stapp calls “new build rental communities.” Basically detached homes built with the intent to rent. “This is emerging from the foreclosure purchase rental trend. There’s a lot of capital being placed into this housing type.” Additionally, he noted that a lot of money is being poured into the purchase of mobile homes and mobile home parks by large institutional investors to hold onto as income-pro- ducing assets. STILL AVIABLE MARKETPLACE The Phoenix market still holds opportunity for both fix-and-flip and buy-and-hold investors. However, the combination of low inventory and massive purchases by institutional investors and private equity firms has made it harder for small individual investors to find deals. In these market conditions, the key to identifying properties that will provide cash flow for investors comes

down to networking. “Small investors are still here, just not at the scale that the institutional investors and equity firms are buying at,” said Sarah C. Richardson, desig- nated broker and principal at Tru Real- ty in Scottsdale, herself a wholesaler. “Most of the wholesalers are dealing with fix-and-flippers, not buy-and-hold investors. We need to get the buy-and-hold investors on the list to get these off-market proper- ties. If you’re really dialed in to some of these wholesalers, there’s still cap rates to achieve,” she said. For investor Brian Manley, principal and co-founder of The Property Cart- wheel Group, the tight inventory of existing homes, a somewhat soften- ing market and increased competition

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Joel Cone is a freelance business writer based in Southern California. His articles have appeared in California Real Estate magazine, Real Estate Southern California, OC Metro, GlobeSt.com, Foreclosure News

Report, the Los Angeles Daily Journal and the Smarter Investor blog for U.S. News &World Report, as well as many other print and online publications. Contact him at snocone1030@gmail.com.

108 | think realty magazine :: may / june 2019

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