Phoenix Real Estate Market Report 2019

Learn the ins and outs of investing in rental properties in the Phoenix housing market. Figure out the top neighborhoods, the best property type, and the optimal rental strategy for investing in the Phoenix real estate market in 2019.

Phoenix Real Estate Market Report 2019
Home Market Reports Phoenix Real Estate Market Report 2019
Phoenix Real Estate Market Report 2019

Phoenix Overview

Phoenix is the capital of the State of Arizona as well as the most populous city there.

With a population of more than 1.66 million people, Phoenix comprises the fifth largest city in all of the US (after New York City, Los Angeles, Chicago, and Houston) in addition to the only state capital with over 1 million residents. The PhoenixMesaScottsdale Metropolitan Area, commonly referred to as The Valley of the Sun and The Salt River Valley, has a population of over 4.7 million people, which makes it the 11th most populous metro area nationwide. Phoenix is also the seat of Maricopa County.

The city benefits from a well-diversified economy. Real estate constitutes one of the five main industries in the Valley of the Sun, followed by finance and insurance, manufacturing, retail trade, and health care. Administration, transportation, professional services, management, trade, and food are other important employers in the Phoenix economy in addition to the government sector. Phoenix hosts a total of four Fortune 500 companies. It is also home to the Arizona State University West, Arizona State University Downtown Phoenix, University of Phoenix, Phoenix College, and others. All in all, data from the U.S. Bureau of Economic Analysis ranks Phoenix as the 3rd fastest growing economy in the entire country. The economic diversification, the fast growth, the existence of major corporations, and the presence of reputable educational institutions send property investors strong positive signals about the current state and performance of the Phoenix real estate market as well as about the overall perspectives and predictions.

The average income per capita in the Valley of the Sun reaches $24,057 per year, which is less than the national level of $28,555. Meanwhile, the median annual household income is $46,881, below the US rate of $53,482. This means that out of state real estate investors find the Phoenix housing market relatively affordable.

Tourism is one of the longest-standing industries in Phoenix. In 2017 the Greater Phoenix area welcomed over 44 million visitors, including both leisure and business travelers. More than 1.8 million of them were international tourists. The warm climate attracts visitors year-round. Some of the major attractions in and around the city comprise of the hundreds of golf courses, the Phoenix Symphony Hall, the Orpheum Theatre, the Phoenix Zoo, the Phoenix Botanical Gardens, the Grand Canyon, Lake Havasu, the Organ Pipe Cactus National Monument, the Painted Desert, the Meteor Crater, and others.

The fact that the capital of Arizona is a major tourist destination makes the Airbnb Phoenix rental business one of the hottest homesharing industries in the whole nation.

At the same time, nearly half (47%) of Phoenix population rents rather than owns home. This translates into more than 780,000 renters in the Phoenix real estate market, showing strong demand for long term rental properties there. The high demand for Phoenix vacation rentals and traditional rentals is encouraging for Phoenix, Arizona real estate investors.

Phoenix Real Estate Market 2019 Overview

  • Median Property Price: $404,900
  • Price per Square Foot: $205
  • Real Estate Appreciation: 110% since 2000 (significantly above the Arizona real estate appreciation rate and the US average)
  • Days on Market: 68
  • Listings for Sale: 2,927
  • Price to Rent Ratio: 23 (high)
  • Buyer’s Market or Seller’s Market: A seller’s market shifting towards a buyer’s market
  • Renters’ Percent of Population: 47%

The Phoenix housing market continues to be a top performing location for US real estate investors in 2019, and this trend is expected to persist in 2020 and beyond. Indeed, the PwC Emerging Trends in Real Estate: United States and Canada 2019 report ranked the Arizona capital city as #29 among the 79 featured markets for overall real estate perspectives, the list being headed by Dallas/Fort Worth, New York-Brooklyn, Raleigh/Durham, Orlando, and Nashville. The prestigious publication praises the Phoenix real estate market for its ability to attract high net migration – mostly from higher-cost states such as New York, Illinois, California, and New Jersey (similar to Spokane, Washington and Salt Lake City, Utah), working age population, and high employment growth, expected to be double the national average in the next 5 years. Not only people but also companies are moving to the Arizona capital at an increased rate.

Importantly, according to PwC, real estate development and investment opportunities are strong in the Phoenix market and across all property types. The Phoenix housing market is ranked as #17 in terms of homebuilding prospects.

Similar to many other best locations for real estate investing in 2019, such as the Dallas real estate market, the Atlanta real estate market, the Orlando real estate market, the Austin real estate market, and the Chicago real estate market, the Phoenix housing market is undergoing a transition. Phoenix concluded 2018 and began 2019 as a seller’s market. However, according to Phoenix real estate experts the local market is moving towards a buyer’s market in 2019 and 2020. The main indicator for this shift is the stabilizing prices of houses for sale in Phoenix. Inflation in the Phoenix real estate market is now under control. Moreover, property buyers have to compete with only 2-3 other buyers, while previously they had to enter into bidding wars with as many as 15 buyers including real estate investors and home flippers. Inventory of homes for sale in Phoenix is still relatively low with 2,972 Phoenix, AZ real estate listings, which means that the move towards a buyer’s market has not been completed yet.

The median price of Phoenix homes for sale is significantly below the median level in many other top locations in the US housing market in 2019, such as the New York real estate market, the San Francisco real estate market, the Los Angeles real estate market, and others. Nevertheless, Phoenix real estate prices exceed the nationwide median home value of $229,000 by 77%. Meanwhile, in the past years real estate appreciation in Phoenix surpassed the Arizona and national levels, which makes Phoenix buy and hold real estate a good and profitable long term investment strategy. Making money in real estate in the short term is also feasible in the Phoenix housing market, as the rest of this Phoenix real estate market report 2019 will show.

Best Property Types for Investing in the Phoenix Residential Real Estate Market

  • Single Family Homes for Sale in Phoenix, AZ: 2,219
    • Median Property Price: $437,700
    • Price per Square Foot: $205
    • Average Monthly Traditional Rental Income: $1,560
    • Average Traditional Cap Rate: 1.4%
    • Average Monthly Airbnb Rental Income: $2,570
    • Average Airbnb Cap Rate: 3.2%
  • Condos for Sale in Phoenix, AZ: 330
    • Median Property Price: $295,000
    • Price per Square Foot: $226
    • Average Monthly Traditional Rental Income: $1,140
    • Average Traditional Cap Rate: 0.0%
    • Average Monthly Airbnb Rental Income: $1,140
    • Average Airbnb Cap Rate: 1.4%
  • Townhouses for Sale in Phoenix, AZ: 292
    • Median Property Price: $294,100
    • Price per Square Foot: $184
    • Average Monthly Traditional Rental Income: $1,230
    • Average Traditional Cap Rate: 0.7%
    • Average Monthly Airbnb Rental Income: $2,160
    • Average Airbnb Cap Rate: 2.9%
  • Multi Family Homes for Sale in Phoenix, AZ: 54
    • Median Property Price: $433,400
    • Price per Square Foot: N/A
    • Average Monthly Traditional Rental Income: $1,300
    • Average Traditional Cap Rate: 1.1%
    • Average Monthly Airbnb Rental Income: N/A
    • Average Airbnb Cap Rate: N/A
  • Foreclosed Homes for Sale in Phoenix, AZ: 83
    • Median Property Price: $256,900
    • Price per Square Foot: $149
    • Average Monthly Traditional Rental Income: $1,710
    • Average Traditional Cap Rate: 4.3%
    • Average Monthly Airbnb Rental Income: $1,870
    • Average Airbnb Cap Rate: 3.2%

Single family homes dominate the Phoenix real estate market as they make up 76% of all homes for sale in Phoenix, AZ. this is similar to the majority of other top-performing real estate investment locations. Condos for sale in Phoenix comprise 11% of all listings, followed by townhouses (10%), and multi family homes (2%).

Why Investing in Single Family Homes in Phoenix

The price of single family homes for sale in Phoenix exceeds the city median level by 8%. However, the expected rental income for both long term and short term rentals is above the city-wide average. Detailed real estate market analysis shows that single family homes constitute the most profitable property type in the capital city of Arizona as they yield the highest return on investment for both rental strategies. An additional benefit of investing in single family homes in Phoenix as well as in other locations is the tenants which they attract. Mostly young professionals and small families tend to rent this property type. They are good tenants who cause only minimal tear and wear and take good care of the rental. This means that your maintenance and repair costs will be kept to a minimum which will push up your long term return on investment. Investors have 2,210 Phoenix single family homes for sale to choose from, which means that they are likely to find the exact investment property which they are looking for.

Why Investing in Condos in Phoenix

Investing in condos for sale in Phoenix is an affordable option for beginner real estate investors and others with a limited budget. The reason is that condos are listed for 27% less than other property types in the Phoenix housing market. The higher price per square foot (resulting from the extra amenities and services which condos offer) is offset by the smaller size of these homes for sale in Phoenix. While property investors have 330 Phoenix real estate listings to choose from, they should keep in mind that real estate data reveals that this property type is not the most beneficial real estate investment strategy in the Phoenix real estate market 2019 for either rental strategy. Moreover, before investing in a condo, investors should check carefully the rules and regulations of the HOA as many of them prohibit altogether or at least limit opportunities for renting out condo housing units, whether on short term basis or long term basis.

Why Investing in Townhouses in Phoenix

Townhouses for sale in Phoenix, AZ are another affordable property type in the local housing market as they sell for 27% less than other Phoenix, Arizona homes for sale. They are also relatively cheap in terms of price per square foot. Phoenix real estate investors can choose from 292 listings to find the investment property which meets all their criteria and requirements.

Why Investing in Multi Family Homes in Phoenix

Investing in multi family homes in the Phoenix real estate market provides investors with a straightforward opportunity to diversify their investment portfolio with a few properties within the same location. For those investors who want to be landlords too, this will decrease the time they need to spend on traveling to and from their rental properties. For those looking for passive rental income strategies, hiring a professional property manager makes perfect sense with multi family homes. While multi family homes for sale in Arizona offer good return on investment when rented out on long term basis, there isn’t enough data to show their performance as Phoenix short term rentals. The inventory includes a total of 54 multi family properties for sale in the Arizona capita.

Why Investing in Foreclosures in Phoenix

Foreclosed homes for Phoenix, AZ sell for only 63% of the price of other Phoenix real estate listings. This makes them a perfect investment opportunity for investors looking for cheap houses for sale in Phoenix, AZ and for forced appreciation. Because of the low property price, foreclosures constitute top-performing rental properties as both their cap rate and cash on cash return are high, whether they operate as traditional Phoenix rental properties or Phoenix Airbnb rentals. Currently investors in the Phoenix housing market have 126 foreclosed properties to choose from.

Important Stats for Phoenix Real Estate Investors

Safety in the Phoenix Real Estate Market

  • Crime Rate Index: 7 (100 is highest)

Phoenix is safer than 7% of US cities, with a high overall crime rate of 45 crimes per 1,000 residents.

Access in the Phoenix Real Estate Market

  • Walk Score: 41
  • Transit Score: 36
  • Bike Score: 52

Phoenix is the 31st most walkable large city nationwide. It has some public transportation and is somewhat bikeable. Overall, Phoenix is a car-dependent city as running most errands requires a car.

Affordability in the Phoenix Real Estate Market

  • Cost of Living Index (Excluding Rent): 66
  • Rent Index: 35
  • Cost of Living Plus Rent Index: 51

The cost of living index excluding rent in Phoenix is 34% cheaper than in New York City. Rent is 65% less expensive than in NYC. All in all, the average cost of living plus rent index in Phoenix, AZ  is 49% below the level in New York City.

Phoenix Real Estate Tax Rates

  • Average Effective Effective Property Tax Rate in Maricopa County: 0.802%
  • Average Effective Effective Property Tax Rate in Arizona State: 0.845%

Phoenix real estate taxes for residential properties are paid on the assessed value of the property, which equals 10% of the market value. The Phoenix housing market has one of the lowest property tax rates in the US, significantly below the national average of 1.211% of the assessed value of the property. For comparison, the owner of a $250,000 real estate property in Maricopa County pays an average of $2,005 in property taxes per year, while the nationwide real estate tax amount would be $3,028.

Meanwhile, if you’d like to buy an investment property with a high return in states with no property tax, check out Texas, Hawaii, Alabama, Louisiana, West Virginia, and Wyoming.

Phoenix Real Estate Market: Traditional Rentals

  • Average Monthly Rental Income: $1,470
  • Average Cap Rate: 1.2%
  • Price to Rent Ratio: 23
  • Renters’ Percent of Population: 47%
  • Optimal Property Type: Single family home or multi family home
  • Optimal Number of Bedrooms: 0 and 4
  • Traditional Rental Listings: 8,540
  • 3 Best Neighborhoods in Phoenix for Investing in Traditional Rental Properties: Maryvale, Estrella, and Central City
  • 3 Worst Neighborhoods in Phoenix for Traditional Rental Properties: Desert View, Ahwatukee Foothills, and Laveen

Investing in the Phoenix real estate market is one of the top strategies for making money in 2019 and beyond. An important benefit of Phoenix investment properties is their affordability compared to real estate properties in other top markets. This means that financing a rental property in the Phoenix housing market does not pose a major challenge to investors.

While the city-wide traditional cap rate does not seem like a lot, it exceeds the level in the vast majority of other best places for real estate investments. Phoenix real estate investors should keep in mind that this is only a city average, whereas certain Phoenix neighborhoods and investment properties generate a much higher return on investment.

Another positive driver of the good rate of return for long term Phoenix rental properties is the strong rental demand. There are over 780,000 renters in the Valley of the Sun, the majority of whom comprise of young professionals and small families who make for good tenants. This demand is supported by the positive net migration and the strong economic growth as young professionals look for options to escape unaffordably expensive real estate markets and for job opportunities.

The high price to rent ratio indicates that demand for traditional rentals in the Phoenix housing market will continue to be strong. Real estate prices are high compared to rental rates, which means that people will continue preferring to rent rather than buy. At the same time, a price to rent ratio of 23 is not high enough to prevent profitable real estate investments.

In the Phoenix real estate market single family homes make up for the best property type to rent out on long term basis as they offer the highest return on investment in terms of cap rate and cash on cash return. Single family homes for sale in Phoenix are ideal to attract the abundant numbers of young professionals and small families looking for a rental property in the Valley of the Sun. multi family homes are the next best rental property type. Investment properties with 0 bedrooms (studios) and 4 bedrooms (single family homes and townhouses) offer the highest profitability in Phoenix in 2019. Smart real estate investors should explore the available foreclosed homes in Phoenix, AZ as this is a resourceful, yet relatively easy way to find cheap investment properties which naturally offer higher return.

Landlord-Tenant Law and Regulations in the Phoenix Rental Market

The landlord-tenant relationship in the Phoenix real estate market is governed by the Arizona Residential Landlord and Tenant Act, similar to the Tucson real estate market, the Scottsdale real estate market, the Mesa real estate market, the Tempe real estate market, and the Flagstaff real estate market. Overall Arizona is considered a landlord-friendly state. However, the above-mentioned Act also supplies the necessary provisions for the protection of tenants’ rights in the Arizona housing market.

In terms of security deposits, the state laws allow landlords to collect security deposits in Phoenix. However, the amount should not exceed the rental rate for a month and a half, and the security deposit has to be returned to the tenant within 14 business days after leaving the property. Unlike in the Chicago real estate market, there are no requirements for interest payments on security deposits in the Phoenix housing market.

Written rental agreements are required only for traditional rentals of 12 months or more. The rent on Phoenix investment properties can be raised at the discretion of the landlord, provided that he/she gives the renter a one-month notice. In addition, landlords are not required by law to provide receipts for security deposits and rent payments. With regards to late fees, there is no limit on their amount, and they don’t have to be written in the rental agreement.

An investor has the right to access his/her Phoenix rental property for regular checkups as long as he/she provides the tenant with a 2-day notice. In case of emergencies, the landlord can access the rental without prior notice.

If things go really bad for your as a landlord in the Phoenix real estate market, you are still protected. Evictions are feasible in the Valley of the Sun and can happen within 14 days though they usually take up to 30 days. A Phoenix renter can be evicted for different reasons including not paying rent, violating the lease, damaging the rental property, and committing a crime. The first step which the landlord needs to take is to terminate the lease, which is called a special detainer action. This is usually done after giving a notice to the tenant. There exist a few different types of notices in the Phoenix, Arizona real estate market, depending on the type and severity of the violation. All in all, the only way to remove a tenant from your rental unit is to win an eviction lawsuit, after which a law enforcement officer can take the necessary measures.

If you would like to explore the investment potential of other landlord friendly states, check out long term rental properties in Texas, Indiana, Colorado, Georgia, Kentucky, and Alabama.

Best Phoenix Neighborhoods for Investing in Traditional Rentals

Phoenix Real Estate Market Report 2019 Best Phoenix Neighborhoods for Traditional Long Term Rentals

1. Maryvale

  • Median Property Price: $202,300
  • Price per Square Foot: $142
  • Average Monthly Rental Income: $1,250
  • Average Cap Rate: 2.7%
  • Walk Score: 46

The Maryvale neighborhood heads the list of the best areas for investing in a traditional rental property in this Phoenix real estate market report 2019. This location constitutes a large urban village where residents can enjoy the numerous parks and the local diversity. This neighborhood offers the highest return on investment for long term rentals across the Valley of the Sun. The main reason for this high profitability is the low property prices, which means that beginner real estate investors as well as others on a tight budget can find cheap home for sale in Phoenix, AZ in Maryvale. However, investors should keep in mind that this is not among the safest neighborhoods in Phoenix. Nevertheless, buying a real estate property in Maryvale to rent out traditionally is a good opportunity to make money in real estate in 2019, 2020, and beyond.

2. Estrella

  • Median Property Price: $242,000
  • Price per Square Foot: $145
  • Average Monthly Rental Income: $1,240
  • Average Cap Rate: 2.0%
  • Walk Score: 10

Phoenix real estate market analysis highlights that the Estrella neighborhood is the 2nd best area for owning long term Phoenix rentals. Similar to Maryvale, this neighborhood is very affordable as Phoenix home for sale here are listed for 40% less than in the rest of the local housing market. Estrella is a mixed-use master-planned community with the Phoenix real estate market which is home to over 90,000 people. This area is even less walkable than the rest of the Valley of the Sun. According to real estate data, investing in a rental property in Estrella can be a positive cash flow opportunity with good cap rate and good cash on cash return.

3. Central City

  • Median Property Price: $271,000
  • Price per Square Foot: $217
  • Average Monthly Rental Income: $1,220
  • Average Cap Rate: 1.7%
  • Walk Score: 23

The Central City neighborhood is ranked as #3 among the best neighborhoods in Phoenix to buy a long term rental. This is an urban village which hosts the downtown area of Phoenix and is home to over 58,000 residents. Cheap houses for sale in Phoenix are available here, which makes this neighborhood an excellent choice for investing in real estate with little money. Rental demand in Central City is strong as the majority of people living here rent rather than own a home. Buying an investment property in Central City is a profitable real estate investment strategy in 2019.

4. Deer Valley

  • Median Property Price: $306,700
  • Price per Square Foot: $177
  • Average Monthly Rental Income: $1,370
  • Average Cap Rate: 1.5%
  • Walk Score: 25

Deer Valley is the 4th top place to buy a traditional rental property in the Phoenix real estate market 2019. While the prices of houses for sale in Phoenix, AZ in this area are higher than in the neighborhoods above, the expected return on investment is still very good. This urban village is ranked as the #1 most liveable location in the Phoenix real estate market with a livability score of 75. This quality is sure to attract good tenants and make for profitable real estate investments in the Deer Valley neighborhood. Investing in a traditional rental property in Deer Valley is a money-making opportunity in 2019.

5. South Mountain

  • Median Property Price: $276,600
  • Price per Square Foot: $166
  • Average Monthly Rental Income: $1,280
  • Average Cap Rate: 1.4%
  • Walk Score: 26

South Mountain ranks as #5 among the best neighborhoods for long term rental property investments in this Phoenix real estate market 2019 report. Data shows that Phoenix houses for sale in the South Mountain neighborhood are affordable, costing about a third less than in the rest of the Phoenix housing market. This area offers good opportunities in terms of housing and public schools, which makes it ideal for small families. Buying a rental property in South Mountain to rent out on traditional basis is an excellent positive cash flow opportunity for beginners in the real estate industry.

6. New Village

  • Median Property Price: $320,600
  • Price per Square Foot: $163
  • Average Monthly Rental Income: $1,500
  • Average Cap Rate: 1.4%
  • Walk Score: 0

The last on this list of the best Phoenix neighborhoods for investing in a traditional rental property in 2019 is New Village. This is indeed one of the top areas for living in the Phoenix housing market with a livability score of 71. Real estate for sale in Phoenix, AZ in the New Village neighborhood is 21% cheaper than in the rest of the city. Owning an investment property in New Village to rent out on long term basis could be a profitable real estate investment strategy for beginners in 2019 and 2020.

Phoenix Real Estate Market: Airbnb Rentals

  • Average Monthly Rental Income: $2,440
  • Average Cap Rate: 2.9%
  • Average Occupancy Rate: 53.5%
  • Optimal Property Type: Single family home or townhouse
  • Optimal Number of Bedrooms: 4 and 0
  • Airbnb Rental Listings: 406
  • 3 Best Neighborhoods in Phoenix for for Airbnb Rental Properties: North Mountain, Central City, and South Mountain
  • 3 Worst Neighborhoods in Phoenix for Airbnb Rental Properties: North Gateway, Camelback East, and Encanto
  • Phoenix Airbnb Legal Status: Legal for owner-occupied and non-owner occupied residential real estate properties in all neighborhoods. A transaction privilege license is required. A state transaction privilege tax, a county excise tax, and a local transient occupancy tax have to be paid.
  • Annual Events in Phoenix with the Highest Airbnb Occupancy Rate:
    • Arizona State Fair: October

This is one of the most visited annual events in Phoenix which attracts hundreds of thousands of visitors from the entire state in addition to other states. The fair features musical performances, sports events, fun opportunities for the entire family, and different foods.

    • Phoenix Film Festival: March-April

This is one of the most important and largest film festivals as well as one of the hottest across the nation. About 300 films attract close to 30,000 visitors each year.

    • Fabulous Phoenix Fourth: 4th of July

This is the largest celebration of 4th of July in the State of Arizona featuring an amazing fireworks show. This is one of the best ways to celebrate 4th of July in Arizona along with the Arizona Celebration of Freedom in Mesa and the July Fourth Tempe Town Lake Festival.

    • ZooLights: November-January

This event takes place in the Phoenix Zoo and is one of the largest holiday light shows in the Southwest. It guarantees fun for the entire family and brings visitors from near and far.

    • Arizona Aloha Festival: March

This annual festival has been running for 25 years, featuring performing groups from Arizona and neighboring states. Guest groups from Hawaii,New Zealand, and the Cook Islands have participated.

    • Phoenix Festival of the Arts: December

This is a weekend-long celebration of the arts, music, and culinary achievements. Over 150 art vendors as well as music performers participate in a series of events.

The Airbnb Phoenix, AZ business has grown quickly in the past few years, and this trend is expected to continue. One of the main factors driving the rapid increase in the number of Airbnb Phoenix rentals is the supportive legal and regulatory framework set up by the Arizona authorities. Despite some recent regulations, effective as of August 2019, owner- and non-owner occupied short term rentals are allowed and not much restricted in all of Arizona, including Phoenix. While Phoenix Airbnb hosts are expected to pay taxes, they don’t interfere with the good profitability of buying and owning a short term rental property in the Phoenix real estate market.

The fact that Phoenix is one of the most visited US cities by both tourists and leisure travelers, coupled with the conducive legal framework, produces the right environment for the growth of the Phoenix Airbnb business. Investing in Phoenix short term rentals is one of the top real estate investing strategies in 2019 and 2020, supported by strong demand, affordable prices, and good nightly rates.

Single family homes for sale in Phoenix and townhouses for sale in Phoenix constitute the most profitable property types for renting out on short term basis in the local housing market. They yield the highest return on investment in terms of cap rate and cash on cash return. With respect to the optimal number of bedrooms in a Phoenix vacation rental home, 3-bedroom real estate properties and 0-bedroom ones (studies) bring the best rate of return with high Airbnb occupancy rate.

Phoenix Airbnb Laws and Regulations

Phoenix in specific and Arizona in general remain some of the most tolerant locations for Airbnb rentals in all of the US, as well as among global cities. There are two main ordinances which regulate the short term rental business in the Valley of the Sun.

In specific, in 2016 the State of Arizona passed Senate Bill 1350, which prevented cities and towns from prohibiting vacation rentals and short term rentals, restricting the use of vacation rentals and short term rentals, and regulating vacation rentals and short term rentals based solely on their classification, use, or occupancy. This Bill became effective on 1 January 2017.

The decision of the state authorities to enhance the development of the Airbnb Arizona business is in stark contrast with the actions of many other locations which decided to severely limit short term rentals or even prohibit them for non-owned occupied primary residences including Airbnb New York, Airbnb Los Angeles, Airbnb Chicago,Airbnb San Francisco, Airbnb Las Vegas, and Airbnb Santa Monica.

After the growth of Airbnb Phoenix rentals since 2017, the Arizona State authorities passed a new bill in August 2019: House Bill 2762. The new bill requires Arizona Airbnb hosts including Phoenix Airbnb hosts to hold a valid transaction privilege tax (TPT) license. Moreover, the number of the TPT license must be displayed at all ads of the vacation rental home. In addition, large loud parties are no longer allowed in Arizona short term rentals. Municipalities are given the right to decide whether they require from Airbnb hosts to provide an emergency contact information in case of violations. Fines have been specified for any violations of the new Arizona Airbnb ordinance.

Airbnb Phoenix hosts, as well as the rest of short term rental investors in the State of Arizona, are expected to pay the following taxes:

  • State Transaction Privilege Tax (Sales Tax): 5.6% in Arizona
  • County Excise Tax: 0.5% in Maricopa County
  • Local Transient Occupancy Rate: 5.3% in Phoenix

Best Phoenix Neighborhoods for Investing in Airbnb Rentals

Phoenix Real Estate Market Report 2019 Best Phoenix Neighborhoods for Airbnb Short Term Rentals

1. North Mountain

  • Median Property Price: $342,700
  • Price per Square Foot: $182
  • Average Monthly Rental Income: $3,310
  • Average Cap Rate: 6.8%
  • Average Occupancy Rate: 45.8%
  • Walk Score: 39

The North Mountain neighborhood is the best Phoenix neighborhood for investing in short term rentals according to real estate market analysis. This area offers a diverse, suburban lifestyle with many parks and coffee shops. It is one of the top places to live in the Phoenix housing market which also makes it attractive for Phoenix Airbnb guests. North Mountain provides the highest return on investment for Phoenix vacation rentals due to the excellent nightly rates and the affordable Phoenix real estate prices here. Buying a short term rental property in North Mountain is guaranteed to bring a lot of profit as long as you use the proper real estate investment tools and conduct careful investment property analysis.

2. Central City

  • Median Property Price: $271,000
  • Price per Square Foot: $217
  • Average Monthly Rental Income: $2,860
  • Average Cap Rate: 6.4%
  • Average Occupancy Rate: 68.0%
  • Walk Score: 23

The Central City neighborhood ranks as #2 among the best neighborhoods in Phoenix, AZ for buying a vacation rental property. Real estate investors who are not certain about their preferred rental strategy should consider buying an investment property in Central City as this area offers a high return on investment for both long term and short term Phoenix rental properties. This neighborhood is characterized by particularly good Airbnb occupancy rate, which is one of the main factors for the high profitability. The other one is the cheap houses for sale in Phoenix, AZ in this location. Thus, if you are looking for a profitable real estate investment strategy in 2019 and 2020, think about investing in a vacation rental in Central City.

3. South Mountain

  • Median Property Price: $276,600
  • Price per Square Foot: $166
  • Average Monthly Rental Income: $2,500
  • Average Cap Rate: 4.3%
  • Average Occupancy Rate: 52.1%
  • Walk Score: 26

The South Mountain neighborhood is another one of the up and coming neighborhoods in Phoenix for Airbnb rental property investments. Importantly, this is also an excellent location for investing in a traditional Phoenix rental, which means that investors can switch their rental strategy down the road. South Mountain offers a good cap rate which is the result of a decent Airbnb occupancy rate and high nightly rates. The Phoenix real estate prices here are also affordable which pushes up the return on investment for short term rentals. Buying an investment property in South Mountain to rent out on short term basis promises to generate a high profit in 2019 as long as you conduct thorough investment property search and analysis.

4. Paradise Valley

  • Median Property Price: $378,300
  • Price per Square Foot: $211
  • Average Monthly Rental Income: $2,610
  • Average Cap Rate: 3.2%
  • Average Occupancy Rate: 49.3%
  • Walk Score: 49

This Phoenix real estate market report 2019 ranks Paradise Valley as #4 among the best Phoenix neighborhoods for owning an Airbnb rental. Houses for sale in Phoenix in the Paradise Valley neighborhood are listed for 7% less than the median level across the city. The Airbnb rental income assures a good cap rate as well as a good cash on cash return for Phoenix vacation rentals in this area. Paradise Valley constitutes a small, affluent community which offers numerous golf courses, restaurants, and shopping opportunities. Thus, it comes as no surprise that it is one of the best places to invest in Airbnb in the Phoenix real estate market. Buying a rental property in Paradise Valley to rent out on short term basis is a profitable real estate investment opportunity in 2019.

5. Deer Valley

  • Median Property Price: $306,700
  • Price per Square Foot: $177
  • Average Monthly Rental Income: $2,300
  • Average Cap Rate: 3.2%
  • Average Occupancy Rate: 49.6%
  • Walk Score: 25

Real estate data on the Phoenix real estate market shows that Deer Valley is the 5th top neighborhood for buying an Airbnb property here. This is an evolving residential area with numerous outdoor activity opportunities. Due to the diversity, parks, and nightlife options, the Deer Valley neighborhood is one of the best places to buy a house in Phoenix, which also makes it attractive for Airbnb Phoenix guests. Investing in a real estate property in Deer Valley to rent out on short term basis offers a profitable real estate investment strategy for even newcomers.

6. Alhambra

  • Median Property Price: $342,800
  • Price per Square Foot: $188
  • Average Monthly Rental Income: $1,780
  • Average Cap Rate: 2.3%
  • Average Occupancy Rate: 58.0%
  • Walk Score: 37

Alhambra is the last among the best neighborhoods in Phoenix for investing in an Airbnb rental property, according to the analysis conducted for this Phoenix real estate market report 2019. The Alhambra neighborhood is an urban village with a population of over 141,000 residents. It is an affordable location for buying homes for sale in Phoenix, AZ to be rented out on short term basis for high return on investment. Alhambra has numerous coffee shops, restaurants, and nightlife activities to offer to its Airbnb Phoenix guests. Investing in Airbnb in Alhambra is a top-performing strategy in 2019 for those looking for ways to make money from real estate.

Investing in Phoenix Real Estate Properties: Optimal Rental Strategy

Real estate data analysis of the Phoenix housing market shows that the property investors can’t go wrong regardless of which rental strategy they choose: short term (Airbnb rentals) or long term (traditional rentals). The cap rate and cash on cash return offered by investment properties in the Phoenix real estate market exceed the return on investment in most other top locations for real estate investing. The drivers behind the performance of the Phoenix market comprise of strong demand for both long term rental properties and short term rentals and relatively affordable prices of houses for sale in Phoenix.

Having said that though, this Phoenix real estate market 2019 report clearly indicates that Airbnb Phoenix is the more profitable rental strategy at the moment. This is because the return on investment for Phoenix short term rentals is more than double the return for traditional Phoenix real estate rentals. This should not come as a surprise considering the fact that the capital of Arizona is one of the top tourist destinations in the US with over 44 million annual visitors. Another important factor contributing significantly to the success of the Phoenix Airbnb business is the stance which local authorities have taken on this issue. Unlike other major US cities and states which decided to curb the short term rental industry, the State of Arizona imposed only limited restrictions on vacation rentals and short term rentals. Clearly the aim of these regulations has been to protect the safety and comfort of Arizona residents, which is particularly important in locations with such high crime rate as Phoenix. Meanwhile, they allow Airbnb Phoenix hosts to continue operating their businesses.

Indeed, Phoenix remains one of the few major US cities where non-owner occupied single family homes can be rented it out short term basis. Thus, the Phoenix housing market can be expected to attract numerous out of state investors interested in this rental strategy.

If, on the other hand, you prefer long term rental properties, the Phoenix real estate market still holds profitable investment opportunities for you. With the property real estate investment tools including an investment property calculator and a property finder, you can find a top-performing traditional Phoenix rental property in a matter of minutes. Whether you aim for positive cash flow, good cap rate, or passive rental income, the Phoenix real estate market can offer it to you.

Why You Should Invest in Real Estate in Phoenix in 2019: The Pros

Real estate investors around the globe and in the US residential real estate market have the same goal: to make money in real estate. This means that property investors are in a constant search for high return on investment locations, and the Phoenix real estate market is exactly this. Even if the average city cap rate for Phoenix long term rental properties and Phoenix vacation rentals does not look like a lot, nationwide real estate data analysis shows that it exceeds the return on investment in the majority of other top locations for real estate investments. So, the first reason why Arizona real estate investors as well as out of state real estate investors should turn their attention to Phoenix is the good cap rate for both rental strategies.

Secondly, while affordability is becoming more and more of an issue in many US housing markets, this is not the case in the Phoenix real estate market. Phoenix investment properties enjoy high appreciation, but their prices have not reached levels prohibitive for buyers. This is a specifically important factor for investors who have limited budgets and rental financing options.

Another thing to keep in mind is the high demand for rental properties in the Phoenix housing market. With over 780,000 renters in the Valley of the Sun, traditional investment properties enjoy high occupancy rates and low vacancy rates, which is one of the main determinants of their rate of return. Similarly, Phoenix welcomes over 44 million visitors per year, who push up the demand for Airbnb Phoenix investment properties. Regardless of which rental strategy they go for, Phoenix real estate investors are expected to benefit from high occupancy, leading to excellent rental income and top-performing return on investment.

Last but not least, the Phoenix real estate forecast is looking all positive for 2020 and beyond. The transition from a seller’s market to a buyer’s market is expected to be completed by some time in 2020. Nevertheless, the values of Phoenix real estate properties will continue rising at a reasonable rate, securing appreciation without approaching a Phoenix housing market bubble. This means that investors in the Phoenix real estate market will be able to find good deals and buy investment properties without entering bidding wars with other property buyers. As long as they make the best use of big data and predictive analytics, investors can find profitable deals in the Valley of the Sun.

Why You May Not Want to Invest in Real Estate in Phoenix in 2019: The Cons

Despite all the benefits offered by investing in the Phoenix real estate markets, investors should take a few factors into consideration when making their decision. For example, crimes are prevalent in Phoenix, which means that investors should factor in some additional spending to secure their rental properties. However, with a top-notch security system, they should be good to go.

Another of the Phoenix real estate market trends to keep in mind is the shift from a seller’s market to a buyer’s market. While this cooling of the Phoenix housing market is generally a positive indicator as it makes buying an investment property there easier, it also means that Phoenix house prices are expected to grow at a slower rate than previously. However, Phoenix real estate appreciation in the past two decades or so exceed both the state and the national level. This means that a small drop should not discourage investors looking for profitable real estate opportunities.

Phoenix Real Estate Market Forecast

Similar to the Phoenix housing market predictions 2019, the Phoenix housing market predictions 2020 are all positive. The major Phoenix real estate trends are expected to remain largely unchanged. The transformation of the Phoenix real estate market from a seller’s market to a buyer’s market is expected to be completed by early 2020. The prices of Phoenix homes for sale are forecast to continue appreciating, even if at a slower pace. The demand for traditional Phoenix rental properties and Airbnb Phoenix rentals will remain strong. All in all, real estate investors can expect above-average return on investment in both the short and the long run, regardless of which rental strategy they choose.

Additional Resources for Investors in the Phoenix Rental Market

Best Phoenix Investment Properties

As this Phoenix real estate market report shows, investors can make a lot of money from real estate with Phoenix rental properties. With the help of an investment property calculator, first-time investors can search through the 2,927 houses for sale in Phoenix and filter the ones that meet their criteria such as budget, neighborhood, property type, optimal rental strategy, cap rate, and cash on cash return – all this in a matter of minutes. A heatmap tool will provide property investors with a color-coded map of Phoenix neighborhoods to find out the best neighborhoods in Phoenix to buy an investment as well as the worst neighborhoods in Phoenix for residential real estate investments. A Property Finder will even beginner investors land a top-performing investment property depending on their preferred rental strategy and other preferences.

Real Estate Agents in Phoenix, AZ

First-time real estate investors as well as those out of state, part-time ones, and those looking for passive real estate investing can hire one of the top Phoenix real estate agents. An experienced Phoenix real estate agent specializing in working with investors will not only help buyers find a good property but also negotiate the best price with property sellers and close the deal quickly and efficiently. Here are some of the best real estate agents in Phoenix:

Phoenix Real Estate Auctions

Real estate investors interested in investing in foreclosed homes in Phoenix, AZ can check out this calendar for auctions as well as other foreclosure related events in the Arizona real estate market.

Property Management of Long Term Phoenix Rental Properties

Investing in traditional rentals in the Phoenix, Arizona real estate market does not have to be equivalent to becoming a landlord and being in charge of all the daily responsibilities associated with this job. Real estate investors can hire a professional property manager to take care of all the duties of a landlord, while they enjoy their passive rental income.

Property Management of Short Term Phoenix Rental Properties

If you want your Phoenix vacation rentals to be passive real estate investments, you can choose one of the top property managers in the local market to handle all responsibilities related to owning and renting out an Airbnb Phoenix property.

Our Top Blog Posts for Investors in the Phoenix Real Estate Market

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