Single-family home sales in Phoenix have grown over the past six months, partly because of purchases by investors.
The result has been a significant drop in resale inventory since November, when the momentum began, according to Keefe, Bruyette and Woods. Builders and other industry stakeholders now project more than 50 percent growth in new permit issuance for 2012, and have a much more optimistic view of the market’s near future than they did before this trend took hold.
Foreclosure inventory was halved in the past year and about 25 percent fewer of the area’s home sales were real estate-owned or short sales compared to a year ago. The low prices and distressed property conditions drew a significant number of investors to the metro area. Many of these homes have already been converted and are now competing in the rental market, overseen by property management companies.
While investors have played a large role, however, the firm reports that some of the increase in purchases may be the result of owner-occupier activity. Combined, these pressures have been sufficient to reverse some of the decline in home prices, which rose 20 percent year-over-year in March. This could affect the market in a few ways.
Increased home prices and occupancy could make rentals more attractive to some residents. If interest in single-family rentals does drop, lower inventory could allow some investors to sell at better prices.