Metro Phoenix's housing shortage could get even worse, thanks to 2 costly problems (Bisbee: apartment, rentals)

[Sno0909]

Originally Posted by MN-Born-n-Raised

I'm trying to wrap my head around this statistic and I'm having a tough time. From https://www.noradarealestate.com/blo...estate-market/

"Phoenix Rental Trends: 36% of the households in Phoenix are renter-occupied while 64% are owner-occupied. The rents are rising and it makes sense to keep your home and rent it out. In some neighborhoods, the average rental home may rent well over $2,500 a month."

And from back in 2019 https://www.wsj.com/articles/the-***...ix-11560957036

"Armed with loads of cash and the latest in machine learning, investors are reshaping the $26 trillion market for U.S. residential real estate, starting in Phoenix, the petri dish for America’s housing experiments."

I'm confused. What is so hard to understand about this?

[MN-Born-n-Raised]

Originally Posted by Sno0909

I'm confused. What is so hard to understand about this?

If I read it correctly, about 4 out of 10 homes (not apartments) are being rented out in the PHX metro. To me at least, that is a super high percentage of investment homes. It reminded me of when a crazy number of PHX homes around 10 years ago were cash buyers. Unless I got it wrong and 40% includes apartment dwellers. Maybe I'm screwing up the nomenclature. I think of a "home" sale to mean SFH.

[DAXhound]

Originally Posted by john3232

Correction to #15

I was there. Feb of 2006 when the inventory started to rise.

In Feb 2006, I had just bought a 2/2 in a gated community, in one of the top retirement destinations in the world for 23,500. Sold in Rio Rico the previous August.. my Realtor didn't hesitate to say it was all going to come crashing down.

[Sno0909]

Originally Posted by MN-Born-n-Raised

If I read it correctly, about 4 out of 10 homes (not apartments) are being rented out in the PHX metro. To me at least, that is a super high percentage of investment homes. It reminded me of when a crazy number of PHX homes around 10 years ago were cash buyers. Unless I got it wrong and 40% includes apartment dwellers. Maybe I'm screwing up the nomenclature. I think of a "home" sale to mean SFH.

It does seem crazy, but I don't doubt this at all. And I do believe they mean SFH.

Of my 6 neighbors on each side of me (so 12 houses total), we have 5 renters and 7 owners. And I live in a new, up-and-coming, nice part of Gilbert. One of these rentals just got rented for $3,200 a month (people from Washington just moved in).

So when I take that into account, I can only imagine how many homes are rentals on the West Side.

[MN-Born-n-Raised]

Originally Posted by Sno0909

It does seem crazy, but I don't doubt this at all. And I do believe they mean SFH.

Of my 6 neighbors on each side of me (so 12 houses total), we have 5 renters and 7 owners. And I live in a new, up-and-coming, nice part of Gilbert. One of these rentals just got rented for $3,200 a month (people from Washington just moved in).

So when I take that into account, I can only imagine how many homes are rentals on the West Side.

If you asked me to guess, I would have said 20% TOPS! Remember, FBC despises a lot of people/landlords around PHX. All that hate has to be exhausting!

[john3232]

Originally Posted by DAXhound

In Feb 2006, I had just bought a 2/2 in a gated community, in one of the top retirement destinations in the world for 23,500. Sold in Rio Rico the previous August.. my Realtor didn't hesitate to say it was all going to come crashing down.

In 2003 I worked with a fellow whose brother was an RE agent in NV. The co-worker was sending his brother money and the brother was buying/flipping properties like a madman. My co-worker ended up paying off a home in Tokyo and buying a second property in Chiba. All from his share of the profits he made with the brother.

Early 2005 before I bought my first property I called the brother and asked advice on buying investment property. The man didn't say much. He just told me if I bought investment property it needed to go up 10% if I wanted to break even on the sale.

Now, my co-worker never bought in 2005. Never got burned. I used to think what if the brother advised me not to buy. But all was still rosy early 2005. Maybe the NV agent didn't see what was coming.

In any case I bought four homes in 2005 and a year later was up 30 26, 10 and 8 percent. However in 2006 prices were flat and the inventory growing. 2007 I realized I was in trouble, 2008 deep trouble and 2009 wiped out had I been forced to sell.

Owning AZ investment property has been a very weird ride. Too many highs and lows for my stomach.

[john3232]

Originally Posted by MN-Born-n-Raised

If you asked me to guess, I would have said 20% TOPS! Remember, FBC despises a lot of people/landlords around PHX. All that hate has to be exhausting!

It may look glamour like when people see me… snake skin down to the floor, patent shoes to match. But it ain't easy, you gonna have to work some to get to this status, see you at the top.

[Valley Native]

Originally Posted by Sno0909

It does seem crazy, but I don't doubt this at all. And I do believe they mean SFH.

Of my 6 neighbors on each side of me (so 12 houses total), we have 5 renters and 7 owners. And I live in a new, up-and-coming, nice part of Gilbert. One of these rentals just got rented for $3,200 a month (people from Washington just moved in).

So when I take that into account, I can only imagine how many homes are rentals on the West Side.

Renters come in all shapes & sizes. The general rule is that renters are more negligent about the upkeep of property compared to owners, which tends to hold a lot of truth, but it isn't accurate in all cases. There were quite a few examples of negligent homeowners during the big downturn more than 10 years ago. Many of them took sub prime loans, defaulted, then walked away from their responsibilities. They had no business buying in the first place.

[locolife]

Originally Posted by MN-Born-n-Raised

If I read it correctly, about 4 out of 10 homes (not apartments) are being rented out in the PHX metro. To me at least, that is a super high percentage of investment homes. It reminded me of when a crazy number of PHX homes around 10 years ago were cash buyers. Unless I got it wrong and 40% includes apartment dwellers. Maybe I'm screwing up the nomenclature. I think of a "home" sale to mean SFH.

Not sure if I understand you correctly but Phoenix seems to be on the low end of the US average for population that rents.


https://www.governing.com/archive/ci...tatistics.html

[MikeL78]

Originally Posted by dontbelievehim

Increases are unsustainable, this is likely the max pricing you'll see for a long while.
Young buyers aren't dumb, they research more than ever. They'll all start heading to places that offer the best bang for the buck, and Phoenix isn't it anymore.
If you think tons of people will pay a 200k+ premium to live in Phoenix over OKC or Bakersfield, I got some bad news for you. If Phoenix was built like Portland or philly, perhaps. But Phoenix is the opposite of those two places.
Sell Phoenix

Are you serious with this? The YouTubers pushing this crash hysteria might mention OKC and Bakersfield but people aren’t moving there in large numbers. They pick data that best suits their narrative for clicks. Those cities are a stretch even for older people. Younger people want more excitement and are willing to sacrifice. They’ll put off buying a house instead of moving to the most boring cities in America.

The Phoenix market will probably address home affordability with more townhomes and patio style homes with rear garages. I don’t have a crystal ball but I’d assume builders have to be planning more of those in 2022.