There are many reasons why more and more families are moving to Arizona. The Grand Canyon State boasts year-round sunshine, relatively low cost-of-living, and a thriving job market.
This might explain why the real estate market in Arizona has boomed with no signs of slowing down any time soon. According to realtor.com, Phoenix home prices have risen an average of 29.5% every year over the past ten years.
This is exciting news for investors. The data shows that the renter’s market is equally strong, especially in the Phoenix metropolitan area with 36% of occupied homes attributed to rentals.
Therefore, owning property here has the potential to generate rental income on top of gaining value. If you’re interested in investing in Phoenix real estate, here are three home types you can choose from.
Most Popular Real Estate Options in Arizona
1. Single-Family Homes
A single-family home is generally defined as a detached unit with its own private entrances and utilities, such as the quintessential house. In Arizona, single-family homes account for 80% of real estate sales. Therefore, buyers and investors alike will have plenty of options to choose from if they are in the market for this type of home.
Statistically, there are more single-family homes for sale or rent in the outer cities of the metro area. Scottsdale and Tempe in particular are relatively favorable areas for long-term investing due to growing job markets, good schools, and low crime rates, all of which contribute to growing real estate values.
The benefits of owning a single-family property are immediately obvious. A house offers more privacy than an attached dwelling, such as a condo or townhome. The homeowner also has a greater degree of control over repairs, renovations, and other changes, resulting in more opportunities to add value to the home. Economically, a house costs less per square foot compared to other home types.
The main disadvantage of buying a single-family home is the price tag. As a rule of thumb, houses will cost more than other home types in a given area. In addition, they require more upfront capital, such as cash for a down payment and closing costs. Another downside is the responsibility of maintaining the property, including the financials that go along with that responsibility.
A condominium, or condo, is a unit within a multi-unit building where each unit has its own individual owner. Usually, the condo owner is responsible for maintenance and upkeep related to their individual unit, such as plumbing, wiring, and appliances.
Meanwhile, the building’s exterior, landscaping, and community amenities are maintained by the condo association, which collects fees from the condo owners.
Condos are particularly attractive in Arizona for several reasons. They are a popular choice for retirees and empty-nesters looking to downsize. Given Arizona’s high population of retirees, there is always a market for condos in the local real estate scene.
Specifically, the cities of Tempe and Phoenix proper offer the best range of condos in terms of availability and value due to urban walkability, number of jobs, and population of adults in the 20-37 year age range.
A condo affords the buyer the ability to own a home at the fraction of the cost of a house. It’s also more affordable to maintain when compared to owning a house, with the condo association assuming responsibility for all common areas. For these reasons, condos make excellent second or investment properties, as well.
Unfortunately, part of living in a condo is the agreement with the condo association, which goes both ways. In exchange for the benefit of having well-kept spaces and amenities, the resident must follow the rules set forth by the association, such as pet policies and noise restrictions.
Condos are generally smaller than houses. There is also less privacy, thanks to proximity of neighbors and a possibility of sharing a wall or living below or above another unit.
Townhomes, also called townhouses, are somewhere between condos and single-family homes. They are typically multi-floor units that share one or two walls with neighboring units. Architecturally, they tend to be taller and thinner than a single-family home.
They differ from condominiums, which house multiple units in a building, because they are usually arranged in rows rather than multi-story clusters. They also offer more privacy by way of private entrances, parking spaces, and perhaps even a yard.
Townhomes for sale in Scottsdale, AZ are a popular buy for those who can’t afford a single family home. Additionally, with the right HOA rules, townhomes make an ideal short-term rental opportunity.
Like a condo, townhomes may come with additional community amenities and perks. They are usually more spacious than a condo without the expense of keeping a house. The owner of a townhome has responsibility and control over the interior of their property and, to a certain extent, part of the exterior.
Generally speaking, they don’t demand as much upkeep as a house. They are relatively affordable and low-maintenance to boot. It can be an especially sound option for a first-time home buyer.
Because a townhome is halfway between a condo and a single-family home, it will tend to have less buyers compared to the other two options when it comes time to resell. In the Phoenix metro area, there are less townhomes when compared to the quantity of houses and condos that dominate the market.
Also, living in a townhome entails sharing at least one wall with another unit. This can make daily living difficult if the neighbors are loud or inconsiderate.
Investing in Arizona Real Estate
Whether you choose a condo, townhome, or single-family home, there are many reasons to consider buying real estate in Arizona. State taxes, home prices, and cost-of-living in Phoenix are relatively low compared to other American metropolitan cities.
It’s a destination for retirees and Snowbirds, so there’s no shortage of year-round and seasonal renters to generate income. Finally, its population is one of fastest-growing in the nation, which means home prices are rising to meet demand. Therefore, owning property in Arizona to bulk up our portfolio can be a very sound investment.