Are you looking for the best place to invest in real estate? Don’t go too far. The Phoenix real estate market, as a matter of fact, is one of the top performing real estate markets in the United States today. Whether it is the job growth that is driving demand for housing or the population growth, the Phoenix real estate market makes a great investment opportunity for many. There’s plenty of untapped potential that all real estate investors should capitalize on. Whether you are looking for traditional or Airbnb rental properties in the Phoenix real estate market, you will get a taste of it all.
Related: Is Phoenix Real Estate Market the Place to Invest at the Beginning of 2018?
Today, we will talk about the factors that have contributed to the growth of the Phoenix real estate market. Following, we will gladly update you on the status of the Phoenix real estate market while providing you with numbers to help you with your assessment. Finally, we will go on to provide you with data about the best neighborhoods in Phoenix that will make you a high return on investment.
What has made the Phoenix real estate market a thriving market?
Population Growth
Phoenix is the fifth most populous city in the US, behind New York, Los Angeles, Atlanta, and Houston. According to the US Census Bureau, last year Phoenix recorded the second highest population growth in the United States behind San Antonio, Texas. In the last decade alone, Phoenix has experienced a 33% growth in its population, adding an additional 1.28 million people. Such an increase in population has consequently translated into more demand for housing and as a result, induced property prices to increase. To accommodate the growing population, more housing units should be made available. According to a study by the National Multifamily Housing Council and National Apartment Association, approximately 150,000 new apartments are advised to be built by 2030 to accommodate the growing population. This is more than one third what the number is today. Everybody wants to be part of the city and invest in it. So should you.
Whether it is the nice weather, growing job market, or favorable and affordable real estate market conditions, many continue to slouch towards Phoenix year after year. If you are looking into buying an investment property in Phoenix real estate, then now is the time.
Job Growth
What is driving demand for the Phoenix real estate market is the job growth the city has been experiencing. With the job market growing, more people are demanding housing to settle in. In Phoenix, jobs are being created at twice the national rate. Particularly, more jobs are being created in high paying sectors. The sectors that have been booming in Phoenix are education, health, and information technology. In fact, Money Magazine last year ranked Phoenix number 3 among the country’s hottest cities for tech jobs.
Moreover, major employers such as State Farm, UPS, ADP, and Santander Consumer USA are also adding more jobs to the market. Intel, per se, is looking to invest $7 billion in Chandler, creating over 3,000 jobs. JPMorgan Chase, in addition, is adding 4,000 jobs this year. There’s plenty of untapped potential that you should capitalize on. The job market is roaring with many jobs being created, meaning more demand for housing to accommodate employees. If you are a real estate investor who is looking for a high return on investment, we then encourage investing in Phoenix real estate market.
Related: Should You Invest in Phoenix Real Estate in 2018?
What’s Up with Phoenix Real Estate?
The Phoenix real estate market is one of the top performing in the United States. In fact, Phoenix is expected to become America’s top real estate market for the next few years. People continue to invest in Phoenix real estate for its thriving job market, outdoor activities and availability of amenities and facilities, and, of course, its affordable housing. Phoenix is actually ranked the 13th most affordable city in the US. Here’s what is going on in the Phoenix real estate market today:
Multifamily Investment Properties: Multifamily homes are falling behind in the Phoenix real estate market 2018. Experts claim a deficit of housing units of over 10,000 units this year. The number is also expected to increase to 18,000 by 2020. Yet, there’s reasonable supply and not a severe shortage of inventory as compared to the national average.
Phoenix Airbnb: Phoenix favors Airbnb rentals. Well, Airbnb in Phoenix is totally legal! The State of Arizona promotes and protects the home-sharing business; in early 2016, the state signed Senate Bill 1350 to protect the emerging home-sharing business. The law protects and forbids cities in Arizona from banning several short-term rentals including Airbnb. The law also allows Airbnb to collect taxes from tenants. This is favorable for landlords! In a city where tourism is the #1 export industry, investing in Airbnb rental properties will bring about high return on investment. We certainly encourage you to do so too.
Property Prices Are on the Rise: If you are looking to invest in Phoenix real estate market, do it now before prices rise too high. Over the year, Phoenix real estate property prices increased by over 9%. Luckily, real estate experts predict prices to rise by only 3% this year. While property prices have increased, they still remain much more affordable compared to other metropolitan cities in the US housing market.
Condominiums Are on the Rise Too: The appreciation of home prices last year has shunned people away from investing in single family housing and more towards condominiums. Come to think about it, with the millennial population growing in Phoenix, smaller and more convenient affordable homes become more preferable. For retirees as well, owning or renting a condo makes a great choice since many amenities and facilities are particularly offered within condo complexes.
Best Neighborhoods in Phoenix Real Estate Market
Here’s a list of the top neighborhoods in Phoenix as far as Cash on Cash Return and Cap Rate. Real estate investing in these locations will be scoring a high return on investment.
Airbnb Phoenix Top Performing Neighborhoods
Camelback East
Median Property Price: $745,110
Airbnb Rental Income: $3,623
Airbnb Cash on Cash Return: 2.59%
Airbnb Cap Rate: 2.59%
Alahambra
Median Property Price: $349,775
Airbnb Rental Income: $1,725
Airbnb Cash on Cash Return: 1.79%
Airbnb Cap Rate: 1.79%
Related: Phoenix Real Estate Market Forecast 2018
Traditional Phoenix Top Performing Neighborhoods
North Gateway
Median Property Price: $425,108
Traditional Rental Income: $1,779
Traditional Cash on Cash Return: 1.5%
Traditional Cap Rate: 1.5%
Desert View
Median Property Price: $543,428
Traditional Rental Income: $1,934
Traditional Cash on Cash Return: 1.25%
Traditional Cap Rate: 1.25%
Paradise Valley
Median Property Price: $418,671
Traditional Rental Income: $1,498
Traditional Cash on Cash Return: 1.17%
Traditional Cap Rate: 1.17%
Deer Valley
Median Property Price: $375,390
Traditional Rental Income: $1,329
Traditional Cash on Cash Return: 0.9%
Traditional Cap Rate: 0.9%
Whether you are looking for traditional rental properties or Airbnb rental properties, the Phoenix real estate market is a good market for both. The growing population and job market, favorable climate and living conditions, and availability of amenities and facilities have all contributed to the demand for real estate investing in Phoenix. While prices may be on the rise, we encourage that you invest in Phoenix real estate market today before prices rise too high. For more information about the Phoenix real estate market, visit Mashvisor. Or, to start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
