Is There Still Profit in Wholesaling Phoenix Homes?
Phoenix, AZ was widely considered one of the first housing markets to start turning around in the U.S. and became the epicenter of a new real estate investment surge. So is there still any room for the city’s home prices to grow and profits for those wholesaling homes?
Last year real estate investors from all over the country and in fact all over the world descended on Phoenix to scoop up bargains on single family homes to be converted to rental properties. This has led to some incredible growth, in the region of over 30% per year.
However, the increased competition has also driven many to other locations since early 2012. Giant private equity firms and individual investors alike have turned to the likes of Detroit and Atlanta in search of more distressed properties.
So is Phoenix’s growth sustainable and should you still consider wholesaling homes there?
A panel of experts and report from the Phoenix Business Journal quizzed on the city’s status, not only concluded that Phoenix doesn’t just still have potential but hasn’t even really gotten into full recovery mode yet, let alone a new boom phase.
Local business analysts point to the fact that despite, apparently sporting some impressive digits in home price growth recently the city still has to regain 60% of the jobs lost in the crisis before really kicking into high gear.
This is in addition to local property ownership still resting 20% below previous highs and the springboard point needed to be reached before really launching into a new boom phase.
In summary the report predicts another 40-50% growth in Phoenix housing prices to go. Based on historical housing cycles and an estimated 10-15 years of upward movement to go it could easily well surpass this.
Even the pessimists can’t deny the additional boost the returning jobs will provide. This is on top of the fact that around 40% of locals simply can’t qualify for a mortgage today due to credit issues. However, many are already well on the way to mending their finances and credit scores and will provide additional kindling for the housing market once they can get home loans.
39% of Arizona home owners are also still underwater but as more opt for short sales and others see equity return more homes will go up for sale, fueling the market with new transactions and providing more upward momentum in home prices.
Let the competition head off to Detroit or Atlanta, there is plenty of room for growth here and rising rents. Those wholesaling homes, rehabbing and flipping houses and even continuing to expand rental portfolios will all find plenty of opportunity in the Phoenix market and perhaps even more bargains as others keep heading off to the latest ‘hot spot’ in the media.
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