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No but it's a solid number. The Phx metro is no longer an inexpensive place to live and hasn't been for some time.
However, compared to the popular areas of Cal the cost of housing is still a bargin.
Totally agree with that. I don't think it will be a cheap place to live ever again but should remain a relative bargain compared to the coastal cities.
Totally agree with that. I don't think it will be a cheap place to live ever again but should remain a relative bargain compared to the coastal cities.
As always, housing costs are essentially a function of desirability and scarcity. So the fact that AZ isn’t the cheapest place to live in the US underlines the fact that AZ is a place people want to go.
By how much? We've got minimal new houses going in, and about 90K new residents moving in each year. Cost relief is definitely needed so that's not a bad thing but some context on how that 10% would impact supply/projected demands would be good.
In migration is relatively less significant that it used to be in housing demand - especially in multi-housing. Few people seem to realize that Phoenix is a big city with many, many native born residents now. Of those, about 70,000 graduate from our public schools in AZ each year and many of those are looking for housing. The prices might have them living with friends and parents but there is a huge, unfilled demand for affordable apartments just from "our own" children coming of age. 10% more apts is a drop in the bucket of need.
Mortgage loan standards and credit quality are a lightyears better post 2007. %age of homes close to or actually underwater is way way lower than 2007. This is observable. I remember a former poster here saying he bought his home in 2010 from a defaulted specuvestor who bought 50 Phoenix homes with 50 times stated "owner occupied" on his loan applications and nobody cared Those were crazy times and it required truly crazy times to create the environment for the GFC plunge. We are nowhere close to that.
Mortgage standards might have changed but the difference now is rates were 2-3% vr 2006. The question will be if your in a home that is now worth 150-250k less are you going to walk away let it foreclose even with 2 1/2% loan? Maybe not if your employed but if we go into a recession and that same homeowner gets laid off from their job they can only gain employment out of state what is their choice??
Once you start dumping homes due to foreclosure, and short sales it will cause prices to drop even more. I'm sick of these big swings in the market I miss the old days where I could sell and buy a home without so much headache. The other thing I'm starting to see is AirBnB pricing falling so many of them pricing went from $250 a night to $97 a night and lot of homes sitting empty. They now are in a situation where something isn't turning the profit they thought when the paid cash for a overpriced home thinking the ROI will make them rich.
Mortgage standards might have changed but the difference now is rates were 2-3% vr 2006. The question will be if your in a home that is now worth 150-250k less are you going to walk away let it foreclose even with 2 1/2% loan? Maybe not if your employed but if we go into a recession and that same homeowner gets laid off from their job they can only gain employment out of state what is their choice??
Once you start dumping homes due to foreclosure, and short sales it will cause prices to drop even more. I'm sick of these big swings in the market I miss the old days where I could sell and buy a home without so much headache. The other thing I'm starting to see is AirBnB pricing falling so many of them pricing went from $250 a night to $97 a night and lot of homes sitting empty. They now are in a situation where something isn't turning the profit they thought when the paid cash for a overpriced home thinking the ROI will make them rich.
IMO, your glass is 1/2 empty if you assume the prices are going to plummet. I think we can all accurately assume PHX area has to go down some more. The only question is how much and that is going to be very localized: less for people with money and more for people who are more economically vulnerable. As I typed, massive inflation with every item including wages is putting a HIGHER floor on what depreciation will happen. If we had deflation going on, well, that's going to remove the floor and apply pressure downward. Therefore if I am right, you cannot look at some massive run-up and assume a correction is going to take place. Because for many excluding NEW buyers, their payments are well inside of affordability. Now go sell your place with 2.5% interest. You are going to get hammered on payment by buying a new place. People are waiting out the storm.
We are all taking educated guesses. To figure out where it's going, you need to take the temperature of the economy. Not only locally but worldwide. It seems you are painting a picture of thinking we are 2008 all over again with a lot of "what-ifs". I will add a "what if". IF we have a recession, the feds will reduce interest rates and housing "payments" will be more affordable. They can quickly decrease interest rates which will skyrocket housing affordability again. Just like that. Housing will continue to slowly deflate until a recession takes hold OR until interest rates stop people from buying whatever they want.
In my opinion, shy of another large shoe drop (international event causing a worldwide recession), employment is going to stay (too) tight. Even with a recession, anybody who bought in PHX during 2020 or earlier is WAY up in value. And with cheap payments, only dumb people are going to walk. Sure, some will. But that's a whole lot different than before. A fraction of people will by upside down. In 2010, 30 year mortgage rates were 4.5%.
We can look back and see who had a more accurate pulse on the economy. A lot of people don't seem to be too concerned. How is the stock market? Certainly, some people thought that the sky was going to fall in 2022. Nope!
So what's your guess? Then in a year, we can see if your 1/2 full glass was correct.
Mortgage standards might have changed but the difference now is rates were 2-3% vr 2006. The question will be if your in a home that is now worth 150-250k less are you going to walk away let it foreclose even with 2 1/2% loan? Maybe not if your employed but if we go into a recession and that same homeowner gets laid off from their job they can only gain employment out of state what is their choice??
Once you start dumping homes due to foreclosure, and short sales it will cause prices to drop even more. I'm sick of these big swings in the market I miss the old days where I could sell and buy a home without so much headache. The other thing I'm starting to see is AirBnB pricing falling so many of them pricing went from $250 a night to $97 a night and lot of homes sitting empty. They now are in a situation where something isn't turning the profit they thought when the paid cash for a overpriced home thinking the ROI will make them rich.
Any data to support this? My personal experience says the opposite, I had family in town for the holidays and they could not find anything under $150 a night on the east side of town (Scottsdale/Tempe/Gilbert/Chandler). I have multiple friends that own multiple Airbnb properties each, the only thing their worried about is local restrictions on short term rentals. Their units have been wildly successful this fall and winter with record prices; one paid off their entire annual mortgage just with a single booking over super bowl weekend. A Google search of top Airbnb investment markets seems to support the valley remaining a strong short term rental market.
Any data to support this? My personal experience says the opposite, I had family in town for the holidays and they could not find anything under $150 a night on the east side of town (Scottsdale/Tempe/Gilbert/Chandler). I have multiple friends that own multiple Airbnb properties each, the only thing their worried about is local restrictions on short term rentals. Their units have been wildly successful this fall and winter with record prices; one paid off their entire annual mortgage just with a single booking over super bowl weekend. A Google search of top Airbnb investment markets seems to support the valley remaining a strong short term rental market.
As a person who used to rent their homes pre-AirBnB (we rented on VRBO before they were sold to Travelocity), the demand in the PHX metro was always soft from the middle of May to late January. It picks up in the later part of January. IMO, the trick with home rentals is to get a bigger home that supports more people. As in, 8-10 people max. That way, 2-4 couples can divide the more expensive per night bill. In 2011-2015, the lowest rate I charged was $225 a night with a one-week minimum. And that was years ago and in Surprise.
In summary, to make the point that rents are down, you need to compare it to 2019, pre-COVID rates. Anything else would be pure speculation.
I will also say that a lot of people are terrible at renting. There is an art to it.
Any data to support this? My personal experience says the opposite, I had family in town for the holidays and they could not find anything under $150 a night on the east side of town (Scottsdale/Tempe/Gilbert/Chandler). I have multiple friends that own multiple Airbnb properties each, the only thing their worried about is local restrictions on short term rentals. Their units have been wildly successful this fall and winter with record prices; one paid off their entire annual mortgage just with a single booking over super bowl weekend. A Google search of top Airbnb investment markets seems to support the valley remaining a strong short term rental market.
I don't have any data but I just feel there are too many of them. Every house sold in the last 6 months in my area are ST rentals most of them are sitting empty. Like 2008 everyone was suddenly a house flipper, hotel business owner and investor.
I don't have any data but I just feel there are too many of them. Every house sold in the last 6 months in my area are ST rentals most of them are sitting empty. Like 2008 everyone was suddenly a house flipper, hotel business owner and investor.
Since you live in Scottsdale, here is what has been happening around you regarding short-term rental policies. Rewinding a bit, Ducey signed a law in 2016 prohibiting cities from banning short-term rentals or enacting their restrictions and regulations.
Yet in the last couple of months, some East Valley cities are proposing a new license fee and mandated $500K in insurance. For instance, Mesa proposes that an ST rental license can be suspended for up to 12 months for three health, safety, noise, nuisance, or other violations within one year. And there are fines for lesser violations. The license can also be suspended for felonious activity. https://www.axios.com/local/phoenix/...t-term-rentals
So as a Joe-Blow rental "investor," they should see the writing is on the wall. It's a poison pill policy to push them out quickly. Plus, ST rental owners must let their neighbors know they are renting. And if I owned a short-term rental, I would be smart enough to know someone who wanted me out could be calling the police for petty stuff. As defined by a neighbor who despises your rental concept, three strikes (phone calls) could easily knock you out of your revenue.
So if I were a short-term rental owner, I would look at the math. Should I sell while getting out is good before a problem neighbor away from having all kinds of problems on my hand?
As I said, there is an art to renting a place. It's about having the correct feedback, pictures, and an ideal feel. All of that aside, you need to get back to people immediately and start selling! I rented from 2005 to 2012. I took in well over $500K in ST rental income when I wasn't using our vacation homes. It's real work to do it well. It's sales. Most of these people don't have a clue. Just take a look at the Scottsdale competition. https://www.airbnb.com/s/Scottsdale-...h_input_header
Notice in that link ^^ Airbnb says "over 1000 Scottsdale Rentals". Nope! To find out how many there are, push the date out in early September 2023 (kids are out of school, it's hot, and there should be near zero people booked that far out too). There are 18 properties per page, and there are 15 pages. Do the math. There are NOT "over 1000 Scottsdale rentals" on Airbnb. Try 270. If ST renters sell 1/2 of the homes (which isn't likely going to happen), 135 homes don't change Scottsdale's home values much. Sure, a home that someone dumps down the block, like your home layout, will change your comp. But that's a lot different than the market tanking.
Since you live in Scottsdale, here is what has been happening around you regarding short-term rental policies. Rewinding a bit, Ducey signed a law in 2016 prohibiting cities from banning short-term rentals or enacting their restrictions and regulations.
Yet in the last couple of months, some East Valley cities are proposing a new license fee and mandated $500K in insurance. For instance, Mesa proposes that an ST rental license can be suspended for up to 12 months for three health, safety, noise, nuisance, or other violations within one year. And there are fines for lesser violations. The license can also be suspended for felonious activity. https://www.axios.com/local/phoenix/...t-term-rentals
So as a Joe-Blow rental "investor," they should see the writing is on the wall. It's a poison pill policy to push them out quickly. Plus, ST rental owners must let their neighbors know they are renting. And if I owned a short-term rental, I would be smart enough to know someone who wanted me out could be calling the police for petty stuff. As defined by a neighbor who despises your rental concept, three strikes (phone calls) could easily knock you out of your revenue.
So if I were a short-term rental owner, I would look at the math. Should I sell while getting out is good before a problem neighbor away from having all kinds of problems on my hand?
As I said, there is an art to renting a place. It's about having the correct feedback, pictures, and an ideal feel. All of that aside, you need to get back to people immediately and start selling! I rented from 2005 to 2012. I took in well over $500K in ST rental income when I wasn't using our vacation homes. It's real work to do it well. It's sales. Most of these people don't have a clue. Just take a look at the Scottsdale competition. https://www.airbnb.com/s/Scottsdale-...h_input_header
Notice in that link ^^ Airbnb says "over 1000 Scottsdale Rentals". Nope! To find out how many there are, push the date out in early September 2023 (kids are out of school, it's hot, and there should be near zero people booked that far out too). There are 18 properties per page, and there are 15 pages. Do the math. There are NOT "over 1000 Scottsdale rentals" on Airbnb. Try 270. If ST renters sell 1/2 of the homes (which isn't likely going to happen), 135 homes don't change Scottsdale's home values much. Sure, a home that someone dumps down the block, like your home layout, will change your comp. But that's a lot different than the market tanking.
I knew about all that what I want to know is are those ST rental homes going to flood the market as they attempt to sell them after purchasing them at a much higher price.
When someone sees $$$ they throw common sense out the window and assume money will flow in. All I'm saying is home prices in 2021-2022 were not normal increases that is going to correct just like in the past.
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Those were crazy times and it required truly crazy times to create the environment for the GFC plunge. We are nowhere close to that.
Housing will continue to slowly deflate until a recession takes hold OR until interest rates stop people from buying whatever they want.
If ST renters sell 1/2 of the homes (which isn't likely going to happen), 135 homes don't change Scottsdale's home values much. Sure, a home that someone dumps down the block, like your home layout, will change your comp. But that's a lot different than the market tanking.
