Phoenix properties have been getting a lot of press coverage lately. Arizona real estate is used to getting attention from the press – for the past four years it’s been mentioned in headline after headline as one of the hardest-hit areas in the US. Phoenix properties and prices plummeted during the recession and housing crisis. For years, the only thing more desolate than the desert landscape (including scorpions, rattlesnakes, cacti…the whole nine yards) was the real estate market.
Today, a headline about Phoenix properties probably includes the words “recovery” or “prices rising,” which is a far cry from what we’d been seeing just a few short months ago. So what happened? Are Phoenix properties really experiencing a recovery, and what does this mean for other struggling markets throughout the US?
Phoenix Properties: On the Rise
According to the recent S&P/Case-Shiller Home Price Index, Arizona real estate is looking pretty sunny (and trust me, they see a LOT of sun). Recent signs of improvement include:
- A 1.3% rise in home prices from January 2011 to January 2012 (Phoenix is one of only three metros in the index to show year-over-year gains)
- Phoenix properties saw the largest price gain from November – December 2011
- Phoenix properties saw the largest price gain from December 2011 – January 2012 (meaning it topped the list two months in a row)
Phoenix Properties: What’s Going On?
Demand for Phoenix properties has been steadily increasing which plays a huge role in recent pricing gains. A large part of this demand comes from investors that were hungry for rock-bottom prices. Investor confidence has had a snowball effect and reinvigorated the economy beyond just housing prices. Also promising is that a significant portion of real estate purchases (40% of single family and condo sales as of January 2012) were cash transactions – a healthy indicator of faith in future growth and gains in the market.
Phoenix properties are also uniquely situated. With a number of different local industries and close proximity to large universities, Arizona holds promise for a strong job recovery. As a double-whammy, it’s also an appealing option for Californians who are looking to move to an area with higher affordability. Internationally, Arizona cities and Phoenix properties have a huge attraction for foreign buyers (particularly Canadians). Together, these factors are a perfect storm for real estate market revitalization. Some are anticipating a temporary spike in foreclosures due to recent regulatory updates, but for the most part, we can expect to see growth and recovery for Phoenix properties through the remainder of 2012 and through 2013.
Phoenix Properties: What It Means Nationally
Signs of a housing recovery in Arizona give us some good indicators to keep an eye out for as we identify other emerging markets. The pricing fluctuations in Phoenix properties are a valuable lesson in the importance of taking into consideration all aspects of a real estate market. Never give up on the underdog, and never get overwhelmed by the hype. Stay focused, stay smart and keep your eyes and ears open if you want to find the best opportunities.
It also reminds us to look at market health individually. The first reactions to the Case-Shiller Home Price Index focused on the fact that the overall picture of the US real estate market was more negative than anticipated, but the US real estate market is just a sum of its parts. It’s like a weather forecast. Might be rainy in Seattle, but Phoenix is seeing nothing but sun.
If you’re a Canadian looking to invest in Phoenix properties or to dive into another US real estate market, check out my US real estate workshops. I can show you how to navigate tricky tax laws and more so all you need to focus on is how to chase those profits.
Also wanted to mention that we’re running a Facebook contest for a chance to win a MacBook Air. Just tell me what living the dream means to you (maybe it involves Phoenix properties!) and have your family and friends vote to win.