There has been a lot of changes to life in the last year. The pandemic affected a lot of jobs and incomes. It affected where and how we worked. It also affected our schools, hospitals, and local dining and shopping places. COVID changed us.
And it has greatly changed the Arizona housing market.
The question is – what should expect for the rest of 2021? With eviction bans, increases in home sales, and a slow in new home builds, what does this mean for landlords and investors?
Let’s take a look at the Arizona housing market from a few different angles.
As we said, many people have lost their jobs or have suffered financially over the last year. This has sent a surge of homes into pre-foreclosure status. This is the time period that begins with the mortgager sends out a default notice. Payments have been missed, a foreclosure appears to be on the horizon, but no legal paperwork has been filed yet – and no writ has been issued.
No homeowner wants to lose their home to foreclosure, but sometimes the best option is to sell.
So, what does this mean for investors? Typically, pre-foreclosure homes are sold below the market value. They want to get out from under the house so they drop the price. Investors who swoop in and buy up these houses often end up with a decent property that has the potential to be turned into something great. A little renovation and may have just scored something incredible.
Though, investing in pre-foreclosures does not come without risk. There could be hefty repair issues within the property that you may or may not know about until after the closing. Plus, with the law allowing sellers the right to rescind, there is always that chance a transaction will be canceled no matter how good it looks.
Regardless, more and more investors seem to be taking the leap and jumping on these cheap properties.
Home sales are on the rise and the competition for them is on fire. Many are saying it is thanks to millennials who took advantage of super-low mortgage rates during the pandemic. And it is existing homes they were after.
Many industries slowed down during the pandemic – including the construction of new homes. This has pushed the influx of buyers to focus on the available inventory: existing homes. With new homeowners and investors seeking the same thing, there has been a lot of fighting to be the one in the buyer’s seat.
All this demand is bringing a slight increase in sale prices, but it is not likely to lead to any serious market crashes down the road. Not to mention that as more construction starts building back up again, the supply with be greater.
Unless you’ve got a great credit score and a chunk of money for a down payment (at least 20%), you may not find it easy to get a mortgage. Lenders are dealing with a lot of open mortgages and even more missed payments. And with all the uncertainty that comes with the economy right now, they don’t know when payments are going to start coming in – if at all. As a result, incredibly strict lending standards have been put into place.
The good news is that thanks to these stricter lending guidelines, there are less likely to be any issues with the Arizona housing market in the future like we saw 15 or so years ago.
What do you do if you are an investor? Well, if you are an investor, you may want to consider other types of funding in order to purchase your properties.
The rental market took a hard hit over the last year with many landlords scrambling to make mortgage payments on their rental properties – especially with many renters unable to afford rent. Thanks to government assistance, those who owed back rent were able to get caught or reduce the money owed, at least.
The current situation has turned many potential investors away from rental properties and it has brought great concern among those who are already there. But what is to come? Will the rental market stay stagnant, or will there be a blossoming in the near future?
Most of those who spend their time analyzing the market feel that rents will recover, especially as life returns to normal thanks to herd immunity. Something to keep an eye on are those properties in more rural areas. With more and more people working from home, convenient commutes are no longer a top priority.
The important thing to remember is that not everyone is going to purchase a home. There will always be renters. Now more than ever, though, you will want to make sure you have a well-established tenant screening reporting process. While it may not do much to counteract unforeseen issues like the global pandemic, we have learned a lot about what could go wrong – and what to look for.
Property managers have been working hard throughout this last year learning ways to keep rental vacancy rates low and rent payments coming in despite everything. If you do end up investing in a new rental property, you may want to let the professionals handle it.
At Real Property Management Evolve, we have a deep understanding of the local Arizona housing market. We recognize that rental rates don’t seem to be improving just yet, but they will.
The pandemic is slowly lifting and everything is starting to show signs of life again. The Arizona housing market has changed quite a bit since this time last year – in ways we never could have imagined. But as our economy begins to really open up and improve, home sales continue to be up, rental rates stagnant – change is sure to come that will even everything back out soon enough.