Real Estate News You Need
Welcome back, readers! We launched WHAT’S UP SOUTHEAST VALLEY in July with the intention of giving you the real estate news you REALLY need WHEN you need it. Last month we covered the basic economic principles behind a seller’s market and how to find the OPPORTUNITY if you were looking to make a move.
This month, we want to talk a little bit about what makes our market unique and what is trending right here in the Southeast Valley. We ran an article on the benefits of having a real estate team that REALLY understands your community - living, working and playing in the Southeast Valley gives us a unique perspective…and we’re going to lay it all out there for you.
TOP 3 SOUTHEAST VALLEY REAL ESTATE TRENDS
So, here goes. There is this idea that millennials only want one thing. So you know what a millennial is, right? The specific definition changes depending on who you talk to, but essentially it is people who are reaching their young adulthood in the early 21st Century. We’re talking about primarily people who were born in the 80s and 90s and who, as a generation, are typically looking for MORE. More income potential, more amenities, more social activities, MORE, MORE, MORE. Up until now, the real estate industry has been obsessed with talking about how millennials are NOT buying houses, how they are all cohabitating with their friends and parents, and how they want this transient lifestyle. We've erroneously interpreted their desire for flexibility, convenience & urban environments as wanting less. Less square footage, less stability, less responsibility - when in fact, the decisions they were making about where and how they lived were often based on wanting MORE. But, more of what? Typically, the answer is LIFESTYLE. The Southeast Valley has become a MAGNET for the millennial generation who are in reality seeking MORE lifestyle, MORE options, and sometimes MORE square footage in their home purchase. Why?
A. Because they can. They can afford it. They have great paying jobs in sectors that are BOOMING in the East Valley like Technology and Healthcare.
B. Because they want to. They want options and this is one of them. Like a baby who transitions to a toddler bed, they want the option to transition to something BIGGER or SMALLER - but they want the option. The Southeast Valley has options.
C. Because they need to. They are making babies or having fur babies or getting hobbies - they’ve got the time, the money and the social environment to have a full life and sometimes that full life requires MORE space.
We’re watching several interesting trends when it comes to investment properties in the Southeast Valley and how resale prices of apartment style units compare to the cost of new luxury condo communities popping up in the metropolitan downtown areas of Chandler, Gilbert, Mesa, and Tempe. We’re seeing a dramatic difference between the $$ per square foot of these fancy new digs (often carrying a hefty HOA price tag) and the sale of similar but older rental units on the MLS. Simultaneously, we are still seeing an increase in the rental prices of traditional homes and patio homes (read: private living space with private backyards or courtyards) but a flattening or decrease in the rental prices of your average apartment style rental units, especially when they are in close proximity to these more modern options.
We’re also hearing more and more about investors who are coming to the Southeast Valley to purchase houses to be used ONLY as vacation rentals (think: VRBO & AirBnB) and iBuyers like Opendoor & OfferPad who are charging an astronomic premium for convenience and snatching up homes in some of the most limited price ranges. SO WHAT, you ask? With the changing investment landscape in the Southeast Valley and the increase of institutional investors, it has become more and more important that you know WHAT you are doing before you pull the trigger on an investment property. Our tips?
1. Understand your carrying costs, how much it will take to prepare the home to go back up on the market, and have a CLEAR vision for what you want to do with the property (read: sell or rent) once you are done with it. Institutional investors have got the renovation game down, do you?
2. If you ARE looking to purchase a property to be used as a rental - take a look at how the purchase price compares to surrounding luxury communities, what the differences are in amenities, and how the landscape may change as the competition for available units for purchase and rent increases or decreases.
3. Think you want to go the VRBO or AirBnB route? Consider the city and any HOA regulations or insurance implications in your cost analysis and take a look at the viability of selling the property in the future (enter location, location, location) if the demand for these short term rentals or the market conditions change.
Imagine you wake up a little groggy from the night before, put your feet on the ground beside your bed, fall down and OOPS - get up a landlord. Just kidding. An accidental landlord refers to some of you who may have become landlords when you didn’t really MEAN to but were kind of FORCED to by the market conditions. Unlike your more traditional investors, if your house wasn’t worth what you wanted it to be or NEEDED it to be - you might have opted to rent it out so that you could make your next move without being tied down. The bad news is that you had to deal with renters for all of these years but the GOOD news is that your time has FINALLY come to relieve yourself of this responsibility. With market experts predicting home values to rise before they start to even out, rents to begin to flatten, inventory to hover near historic lows and home ownership to rebound especially for those under 35 - your time has come to get your money and run. There is a ton of opportunity for investors in the Southeast Valley (see above, go ahead...read it again) but if you’ve been waiting to get out of the landlord game, giddy up little pony and you might just be what we need to loosen up the inventory around here.
July's Closing Shout Outs
#Congrats #Holla #Thanks to these hard working folks who just moved into their favorite find!
And... the same to these fun loving families who just sold one of their most valuable assets!
Looking for something fun to do? So are we! We live, work and play in the Southeast Valley and this month we’ve got our eye on:
Have somewhere you are looking to be this month or want us to feature YOUR event in a future issue? Send us the details via email to: [email protected]