There’s been an extraordinary turnaround for some of the nation’s hardest-hit real estate markets. Tucson, Ariz., is just one example, and it was recently named the best market in the country for investors to buy a home.
Tucson firefighter Keith Cubberley recently bought a brick house in an older middle-class neighborhood. He buys distressed property in his spare time, and when he bough this particular house it was trashed.
“It was dirty and people hadn’t done anything to take care of the property for the last 40 years,” Cubberley says.
So Cubberley gutted it, and now he has workers fixing it up. When he’s done, he’ll re-sell the house. Buying low-end real estate like this, he says, is actually getting harder to do.
“Anything $100,000 and under … are selling very quickly,” he says.
Tucson real estate agent Steve Marshall specializes in finding homes for investors, and he says a lot of homes which would have sat on the market a couple of years ago are now getting multiple offers.
“So they’re starting to list property higher than they used to,” Marshall says. “Property that would’ve listed for $20,000-$30,000 now listing for $50,000-$60,000.”
About a quarter of all home sales in Phoenix and Tucson are to investors; people looking to fix and flip, fix and rent or are looking for a second home.
Mike Orr, a real-estate researcher at Arizona State University, says people are looking for bargains but they’re getting more difficult to find. He says prices are up because inventory is down — there are fewer homes on the market. There are also fewer foreclosures for sure, about 60 percent fewer than last year in the Phoenix area.
“Although we still have a flow of foreclosures taking place, it’s dramatically down from the worst situation which was kind of 2008 through 2010,” Orr says.
Homes worth more than $250,000 are moving up in value, too, but more slowly. Rising prices are good news for Arizona homeowners who saw their property plummet in value since 2008, but Orr says the investor frenzy on the market’s low end is bad news for people who just want to buy an affordable home and live in it.
“When an investor is buying they will very often offer cash and waive the appraisal contingency,” he says, “and that is very attractive to a seller because they know the deal is almost certain to go through.”
Sellers don’t have to wait to see if a buyer has good enough credit to get a mortgage, and relatively tight credit is helping to keep the rental market strong. This is more good news for investors looking for tenants.
Keith Cubberley wants to resell the fixer-upper he bought, so he’s keeping a close eye on expenses. The market is just turning around, after all, and he wants to price the house so it sells quickly to a homebuyer or another investor who will rent it out.
“Ultimately someone’s going to move in here that can enjoy it, so its good for everybody,” Cubberley says. “We make a little money the, neighborhood gets cleaned up [and] someone gets a nice house.”
Having an empty home occupied is good for any neighborhood, though what’s happening in Arizona isn’t happening everywhere. In some markets like Atlanta, Chicago and Las Vegas, prices continue to fall. Expensive markets on the coasts haven’t caught up yet, either.
Arizona, however, and especially Phoenix, experienced one of the biggest bubbles and biggest busts. So this turnaround is especially welcome.