Top Locations Should You Invest in the Phoenix Housing Market in 2020? by Heba Baker September 23, 2019September 22, 2019 by Heba Baker September 23, 2019September 22, 2019 We’re seeing signs of Phoenix approaching a very hot market. Let’s get into the details of what’s to come in 2020. Phoenix Real Estate Market Outlook As the capital city of Arizona, its year-round warm weather isn’t the only thing Phoenix has going for it. The Phoenix housing market is well supported by a number of factors, which have both a direct and indirect effect. Earlier this year, Forbes named Phoenix the fastest-growing city in the country according to this Census data. With a population of 1,660,272, its low cost of living, business-friendly environment, and strong job market will keep drawing more and more people into the city in 2020 and beyond. Population growth plays such an important role in the level of real estate activity a housing market experiences which is why we’ve mentioned it from the very beginning of this blog. Now let’s get into some of the other Phoenix real estate market trends expected to shape the market next year. 1) Job Growth in Advanced Industries This is one of the main reasons why property investors should be looking at the Phoenix real estate market. The downturn in service-sector jobs like retail and construction as a result of the housing crash in 2008 really made way for the tech industry to flourish in Phoenix. Over a decade later, some of the hottest sectors are bioscience and healthcare, manufacturing, and business and financial services. Today these fields make up about 60 percent of the workforce in the Phoenix housing market. With experts predicting a mild recession to hit the US housing market 2020, you can invest in Phoenix real estate confidently as the market is supported by a good concentration of these recession-resistant jobs. This is a big factor behind the large migration to the Phoenix housing market. Since 2010, the city has welcomed 680,000 residents. You’ll be impressed to hear that the job market in Phoenix even got the attention of foreign professionals, with 180,000 of this addition to the population coming from outside the US. Both population and job growth are key factors making Phoenix rental properties a profitable real estate investment in 2020. Related: Job Growth and Its Effects on the US Housing Market 2) Demand for Housing Outpacing the Supply The number of Phoenix houses for sale just never seems to be enough for the level of buyer demand in the real estate market. Recently, active listings in the Phoenix housing market have been consistently lower every month when compared to last year, making a tight housing inventory one of the biggest Phoenix real estate trends for 2020. In August, new listings were down 9.2 percent compared to the same time last year. The same Phoenix housing market trends were apparent in July, where active listings were down 16.6 percent. Still, buyer demand remains high and properties are selling fast. Last month, 1,546 homes were sold in the Phoenix housing market and 2,140 in July, an 8.35 percent increase compared to 2018. Related: Searching for Property in a Low-Inventory Real Estate Market: 6 Tips 3) Pressure on House Prices in Phoenix With the August supply 14 percent lower and contracts in escrow 15.5 percent higher, buyers need to be quick on their feet to find and close on an investment property in the Phoenix housing market. However, a tight inventory isn’t the only concern facing buyers looking to make a Phoenix real estate investment. You can only imagine the level of upward pressure on property prices as a result of such high buyer demand. Phoenix housing market predictions don’t include any flattening prices. The average selling price in Phoenix is up 6 percent since last year and was $265,000 last month. The median home value in the Phoenix housing market is $242,400 which is 4.1 percent higher than last year. This Phoenix real estate market forecast projects that home prices will just continue rising in 2020. With prices on the rise, many worry that a Phoenix housing bubble will hit. However, current mortgage underwriting standards and other factors eliminate the theory of a crash in the Phoenix housing market. 4) High-Performing Phoenix Investment Properties To get an accurate Phoenix housing market forecast of what’s to come, you need data. Here are the most accurate and reliable stats provided by Mashvisor’s investment property calculator: Median Property Price: $406,448 Price per Square Foot: $204 Average Days on Market: 72 Monthly Traditional Rental Income: $1,493 Traditional Cash on Cash Return: 1.1% Monthly Airbnb Rental Income: $2,503 Airbnb Cash on Cash Return: 2.9% Airbnb Occupancy Rate: 53% Clearly, we’re seeing a difference in the level of investment property performance between the two rental strategies (traditional and Airbnb). Yes, the return metrics aren’t very high, but that’s only because these numbers are the citywide averages. A more thorough analysis will reveal different return levels based on each neighborhood. Still, Phoenix vacation rentals are more profitable on the city level so you might be initially inclined to go in that direction. But when discussing a potential investment in short term rentals anywhere, you need to ask about the latest news on Airbnb regulations. 5) Phoenix Airbnb Regulations Is Airbnb legal in Phoenix? Yes. Arizona actually passed a law in 2017 which bans cities, towns, and counties from restricting and regulating short term rentals. Although, recently a new bill was passed which amended this legislation. It took effect on August 27, 2019, and while only slight regulation was proposed, short-term rental operators still need to abide by the new laws. If you’re planning on operating an Airbnb rental property in the Phoenix housing market 2020, make sure to: Hold a current transaction privilege tax (TPT) license Pay tax under the Hotel/Motel classification. The city’s tax rate includes: non-transient hotel lodging tax rate of 2.3% and transient hotel lodging tax rate of 3% (tax return and payment are due on the 20th of the month) Keep tabs on any changes to legislation or regulation on Airbnb Phoenix as new bills may be proposed throughout the year. Find a Profitable Airbnb Investment Property So, Should You Invest in Phoenix Real Estate in 2020? Based on the 2020 outlook for the Phoenix housing market, investing in real estate in the city next year is a great idea. Even though prices are rising and inventory may be low, you can find a profitable investment property in Phoenix. However, you do need to know exactly where to invest because, as mentioned, you’ll find different return levels in each neighborhood. The Best Markets for Real Estate Investment in Phoenix Using data from our calculator, we’ve located the best neighborhoods in Phoenix. Take a look at the stats for each area: North Mountain Median Property Price: $330,219 Price per Square Foot: $177 Monthly Traditional Rental Income: $1,240 Traditional Cash on Cash Return: 1.1% Monthly Airbnb Rental Income: $3,435 Airbnb Cash on Cash Return: 7.0% Airbnb Occupancy Rate: 45% Central City Median Property Price: $280,497 Price per Square Foot: $210 Monthly Traditional Rental Income: $1,171 Traditional Cash on Cash Return: 1.5% Monthly Airbnb Rental Income: $2,840 Airbnb Cash on Cash Return: 6.5% Airbnb Occupancy Rate: 68% South Mountain Median Property Price: $283,113 Price per Square Foot: $166 Monthly Traditional Rental Income: $1,300 Traditional Cash on Cash Return: 1.5% Monthly Airbnb Rental Income: $2,467 Airbnb Cash on Cash Return: 4.4% Airbnb Occupancy Rate: 52% You should invest in the Phoenix housing market, and the three neighborhoods listed above are a great place to start. To make your search easier, use our Property Finder tool. Related: Where to Find Neighborhood Data for Real Estate Investing Start Your Investment Property Search! START FREE TRIAL AirbnbAirbnb RegulationsNeighborhoodPhoenix AZTraditional 0 FacebookTwitterGoogle +PinterestLinkedin Heba Baker Heba is Content Writer at Mashvisor with a BA in Business Administration. Most of all, she enjoys writing about the constantly changing markets in the US real estate industry. If not writing, Heba is exploring and learning. Previous Post Five Essential Pointers to Help You Rent Your Home Next Post 5 Top Real Estate Strategies for 2020 Related Posts 5 Key Jacksonville Real Estate Market Trends for 2019 US Housing Market 2019: Where to Invest in East Coast Real Estate College Towns: The Best Places to Buy Investment Property Why the Pacific Northwest Is a Great Place to Invest Airbnb Hudson FL: Should You Invest in 2022? 20 Most Popular Cities for Gen Z Renters Should You Invest in Airbnb Pittsburgh in 2020? In Which Neighborhoods Should You Invest for the Best Return on Rental Properties in Dallas? 10 Best Places to Invest in California in 2020 Where Should You Buy Real Estate Investment Properties in Anaheim? Boston Real Estate Investing Los Angeles Real Estate Market 2018: Top 4 Reasons to Invest Here Leave a Comment Cancel Reply Save my name, email, and website in this browser for the next time I comment.