Summer Market conditions from the Cromfort Report:
We all know that inventory has been low all year in comparison to prior years. Northeast Maricopa county is down 17% this summer compared to last summer. Rio Verde currently has only 25 properties listed and Carefree had only 44 back in June, lowest in recent memory. Goodyear, Scottsdale and Fountain Hills are also strong sellers markets with reduced inventory BUT demand is starting to weaken as prices rise, inventory does not meet expectations, and a slow rise in interest rates has made buyers “wait” for the conditions to improve .
Rental properties and return on investment:
The Gross Rent Multiplier (GRM) represents the number of years that a landlord would need to rent a property to recover the purchase of the property, and can be used to evaluate the return of investment on a rental property.A number of factors influence the number such as the price paid for the property and any costs to maintain the property, desirable location and the ease of finding a renter in the location. The lower numbers (good for the investor) are found in more remote and less desirable locations with lower taxes and costs. Also more difficult to find a renter and what you can charge that renter! The higher GRM numbers are found in high end vacation rental areas. The average is 14, with some neighborhoods in Phoenix coming in with the low of 10.8. Rio Verde is 18.3 and Fountain Hills 17.8. The high is 85262 in north Scottsdale (Granite Mountain) with 22.6.
The i-Buyer activity:
Opendoor commands 73% of the sales in Maricopa County. Offerpad was next with close to 23%, and Zillow with 4% of the sales by this internet-Buyer. The popularity of this option with sellers is growing, with the price the iBuyer is offering getting closer to market value. Question is, can the iBuyer continue with these slim margins?