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THE SUNDAY SANTAN SUN NEWS | MAY 22, 2022
Housing market shifting away from sellers? Not quite BY PAUL MARYNIAK Executive Editor
Home prices aren’t coming down, but sellers’ negotiating power apparently is as the market may be cooling faster than expected, according to the Valley’s leading analyst of the housing market. “Your negotiation power is dissipating at a rapid rate,” the Cromford Report warned sellers in a post last week. “It will take several months of this trend continuing to reach a balanced market, but this no longer looks like such a farfetched idea.” And if you want to understand one of the factors influencing prices, the Cromford Report offers a suggestion: “Demand from investors for rentals now represents nearly 21% of all home sales.” “The reported intent of buyers has changed significantly over the past year,” it explains. “In Maricopa County, purchases for owner occupation as a primary residence have declined 19.4% between April 2021 and April 2022. Purchases as a second home have declined by 8.1%. In contrast, purchases to turn into a rental have increased by 8.5%.” And it suggests the actual percentage is likely higher, asserting that it’s likely some buyers are not being truthful in stating the reason for the home purchase on the affidavit of value that the state Revenue Department requires on every home transaction. “This is sure to be an undercount,” it states. That affidavit asks the buyer to list whether the purchase is being made for a primary residence, to rent to someone other than a qualifying family member or as a second home. “Just a cursory inspection shows us that many unscrupulous investors are marking their Affidavits of Value as pur-
This 3,469-square-foot house on S. Camellia Place in Chandler recently sold for $1.6 million. Built in 1998, the house has four bedrooms and 3 ½ bathrooms and boasts a family room with a fireplace, lake views, a covered patio and negative edge pool, among other amenities. (Special to SanTan Sun News)
chases of a primary residence, no doubt to attract lower taxes,” the Cromford Report states. “It is perjury to enter incorrect information on an Affidavit of Value and each of these documents are notarized. However, we are yet to hear of any government agency taking action to enforce the state laws surrounding Affidavits of Value.” The influence of investors on the rental market has been significant over the last year as real estate investment companies have been paying two, three and even greater times the price of an apartment complex than the seller paid within the last two to five years. Likewise, large and smaller investors also have been buying single-family
homes, keeping inventory low as prices climb. But one sign of a sea shift in the market – and the reason for the Cromford Report’s pessimistic message to sellers – is its market index. That index bases short-term forecasts of how balanced the market is in 17 Valley municipalities by analyzing the trends in pending, active and sold listings compared with historical data over the previous four years. Values below 100 indicate a buyer’s market, while values above 100 indicate a seller’s market. A value of 100 indicates a balanced market. “All 17 cities are cooling quickly and their CMI is dropping 10% or more over
the past month. 9 cities have fallen by 20% or more over the last month and one – Queen Creek – by as much as 30%,” the Cromford Report said. Still, those markets remain well within what the Cromford Report considers heavily tilted toward sellers in most of those 17 cities. The lowest two are Buckeye, at 188, and Maricopa, at 219, while the two highest are Fountain Hills at 473 and Avondale at 442. Phoenix is at 369 while East Valley submarkets’ rankings are: Mesa, 366; Gilbert, 363; Chandler, 354; and Tempe, 292. Stating that its index as early as May See
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Some advice on investing in Arizona real estate BY CHRIS MORRISON Guest Writer
Arizona has become one of the hottest real estate markets on record. Property values in metro Phoenix have grown 31.1% from last year. Many out of state investors are taking stake in Phoenix properties due to growth forecasts, predicting the city will be in the top 10 best real estate markets this year. Phoenix area home prices are expected to grow at a steady pace this year, making it an ideal market for investors. The limited housing supply also adds to the value, making this an incredibly competitive market. Real estate investing is one of the fastest methods towards generational wealth. While real estate investments pose great opportunities, it is im-
portant to be aware of a few industry basics. If you plan on getting involved in real estate, here are a few suggestions that expert investors follow. Know the neighborhood and risks. Consider the area in which you are purchasing a property. Areas that provide upcoming commercial and retail developments, such as shopping centers and restaurants, increase the odds of a profitable investment return. A growing area in population and future developments is a great sign for a successful investment location. Research the worth of the area and recent comps to predict potential profit. Be sure to calculate renovation expenses and other costs to calculate an anticipated profit margin. Set yourself up to make money and not lose money. Upgrade your vacation home rental.
Arizona is popular to tourists for the incredible weather, golf courses, and college towns. If you are hosting a vacation home, upgrade to a smart lock. Smart locks not only provide easy access for guests, but a sense of security as keys can’t be duplicated or lost. Always keep your rental property in operable shape by repairing issues immediately. Do not forget to have all permits in order and assure all laws are followed where your rental home is located. An organized and clean listing with great photos, will make your rental home stand out for travelers. Grow your investment without purchasing properties. Yes, it is possible to invest in real estate without purchasing real estate property. Invest in a real estate-focused company such as commercial real estate developers, timeshare companies, hotels and similar real estate companies.
Before investing in a company, analyze its stock and history to ensure it is a good option for you and your investment portfolio. Other methods of investing include real estate mutual finds and real estate exchange-traded funds, commonly known as EFTs. Finally, look for a seasoned professional to guide you through the purchase for any type of real estate to ensure a smooth and successful acquisition. A knowledgeable agent will provide expert insight on the evolving market and industry trends that would impact the price of your new property, resulting in the highest return for your investment. Christ Morrison is a founding member of RETSY, a technology-based real estate brokerage with over 300 years of combined experience and more than US $3.5 billion in sales.
