Phoenix is an ever-growing city. Between 2010 and 2018, the city’s population grew by almost 15 percent, vaulting it to the number five spot on the list of America’s most populous cities. Home to approximately 1.66 million people, Phoenix is the most populous state capital in the country, and is attracting more and more residents by the day.
By 2020, forecasts predict it will become the fourth most populous city in the U.S., possibly passing Houston, and the U.S. Census Bureau predicts it’ll be home to 2.2 million people by 2030.
At first, Phoenix was a haven for retirees, but many factors are beginning to attract a diverse population of all age ranges to the city. As such, Phoenix has become one of the best markets in the country for real estate investment.
Investment Considerations for Phoenix Real Estate
Investors should consider the following factors when looking to invest in the Phoenix real estate market:
- Market strength – According to a survey conducted by CBRE, Phoenix ranks as the ninth best city for real estate investment in 2019. The ranking was based on a number of factors that include strong employment, population growth and economic diversity. In fact, CBRE said the Phoenix market is strong in all sectors of real estate.
- Affordability– One reason so many people are flocking to Phoenix is its lower cost of living compared to other cities. According to the CBRE study, only about 20 percent of an earner’s paycheck goes toward rent. That number is closer to 35-40 percent for other large cities such as New York, Los Angeles and San Francisco. This affordability continues to attract residents, which will continue to drive demand for housing.
- Jobs – While Phoenix is growing rapidly, it’s also a very stable market because employment is so strong. Much like the residents of the city, the job market is very diverse, with the healthcare (12.3 percent), retail (11.7 percent), accommodation (8.6 percent) and construction (8 percent) industries leading the way in terms of employment sectors. The diversity of jobs contributes to the city’s overall economic stability.
- Investment level – One of the great parts about Phoenix from a real estate investment standpoint is that the city has a relatively low point of entry for investors. The median home value in the city is $230,493. In fact, 60.2 percent of the city’s homes are valued at $273,000 or less. This means a real estate investor won’t need to come to the table with a huge chunk of money in order to invest in the market.
The Best Markets/Neighborhoods to Invest in Phoenix
South Phoenix has recently provided some of the best returns on investment in the real estate market. The neighborhood has a nice mix of home types and ages, and borders one of the biggest city parks in the country. The Zip code of 85043, in fact, ranked 21st in the country for real estate investment return in 2017 with a 10.3 percent rate of return. Home vacancy rates in the Zip were also below 1 percent, making it even more attractive for residents.
Rio Vista is often ranked as one of the best neighborhoods to live in in the entire state of Arizona. It has excellent public schools, top-notch housing and diversity that make it a great place to raise a family. There are a lot of parks in Rio Vista, giving the neighborhood a rural and suburban feel. It’s also home to a lot of young professionals, making it a prime spot for real estate investment.