Investors dominate Maricopa housing market

Homebuyers with no intention of living in the properties they purchase have taken control of the Maricopa housing market.

During the past year more than 66 percent of home sale transactions in the city were non-owner occupied, according to data from Elliot D. Pollack and Company.

“We are sticking with the term “non-owner occupied” because this group of buyers also includes second home/seasonal home buyers, but the lion’s share of these home purchases are most likely investor purchases,” said senior economic analyst Daniel Court.

The market has essentially attracted two types of investors to the area, those looking to buy property at a low price and quickly resell it, and those looking for long-term investment properties, according to Steve Murray, owner of The Maricopa Real Estate Company.

Murray has done more than 100 investor transactions in the past year and said the vast majority of his clients purchase a home and turn around and resell it immediately.

“The goal is to sell the property as fast as possible,” he said. “It is more like flipping a property rather than investing.”

Not everyone is buying into the market for a quick flip though.

According to Court, the preference is to rent the homes and generate cash immediately so it is not as difficult to sustain a long-term hold while helping to maintain the property in the process.

Local realtor Rita Weiss backs this assessment. “Rental properties are huge in Maricopa right now,” she said. “When many people began losing their properties to foreclosure, they wanted to remain in the city and a rental property was the way to go.”

“I figure close to 40 percent of properties are rentals.”

The market is so large that in the past 12 months Weiss expanded her business from one solely focused on the sales of home to offering property management services also.

An investor with a different approach is New Mexico resident Thomas Finello.

Finello in the past year has purchased two investment properties in the city of Maricopa. He then turns around and sells the homes at what he calls fair market value through owner financing to people who cannot secure traditional financing.

“They pay a little more than if they were renting, but they are actually buying the home,” Finello said. “It is a win-win situation.”

In the past too many investors hurt Phoenix’s housing market. Speculators were blamed for driving up home prices during the area’s housing boom of 2004-06.

However, their return is not being frowned upon.

“If investors were not active in this market, the situation would be dramatically worse,” said Mike Orr, publisher of the “Cromford Report,” a daily online analysis of metro Phoenix home sales and foreclosures.

“Prices would be very much lower, and blighted properties would be deteriorating instead of getting fixed up and sold,” he said.

In the short term Court thinks the renewed interest of investors in the area has helped to stabilize prices by providing some level of competition to distressed houses for sale and increasing the percentage of single family homes in the rental pool.

He added the long-term effect of their return will rely partly on whether the experience of foreclosure for so many households changes their housing preferences going forward.

“Many that have had their homes foreclosed have occupied single family rentals owned by investors. These households are likely to stay in a rental at least until their financial situation improves, including rebuilding credit. However, it is possible that a portion of those households decide not to purchase a home again but instead continue to rent. If that is the case, we would have a permanent increase in single family rentals to accommodate that group. The balance of rental homes will eventually go back on the market as prices recover, and that may dampen a more significant price recovery depending on how many homes that is,” he said.