Cromford Market Update
After the initial shock of dealing with the COVID-19 pandemic, businesses have responded with impressive ingenuity. There are now delivery and curbside options at restaurants and retail shops throughout the nation. While investors were initially spooked by the uncertainty of the pandemic, the economy is beginning to have an upward trajectory again. Judging by the current real estate and economic figures, The market continues to improve for landlords. As your trusted Phoenix Property Manager, we are here to support your needs as we navigate this situation together.
Wall Street Starts Purchasing Homes Again
At the start of the crisis, there was a lot of uncertainty in the real estate market. Wall Street investors decided to hold off on making offers, which meant the entire market was basically on a temporary hold. Now, Zillow and Offerpad have started making offers on homes again.
From February 24 to March 23, 2020, the market suffered from a decline that lasted for 4.5 weeks. While some naysayers thought that the economy was in freefall, the last three months have shown that things are actually getting better. Now that Wall Street is buying homes again, the demand for homes has returned to normal. By June 10, 2020, the Dow Jones had almost returned to its peak. Already, it is as high as it was at the start of March.
The Unemployment Rate Is Starting to Improve
Wall Street is not the only place where things are starting to improve. The unemployment rate is starting to get better as well. Now, new unemployment claims have dropped below 2 percent. The number of new jobless claims has actually been falling steadily since April 4, 2020.
Arizona is consistently lower than the national average. While the old economy is gone, Arizona is creating a new economy that can handle pandemic-related changes. For example, educational centers have transitioned to online classes. Businesses have adopted curbside services. Recently, a Taiwanese company decided to use Arizona as the location for its semiconductor manufacturing. Zoom is also hiring hundreds of employees as it expands in Phoenix. As a Phoenix Property Management company, we only had four people who were late because of COVID-19 in June.
Forbearance Applications Are Slowing Down
Meanwhile, mortgage forbearances are slowing down for the first time since the start of the crisis. As a property management company, we work to help our clients avoid forbearance applications by finding the right tenants. When you vet each tenant thoroughly, you are able to build a solid foundation for your rental income.
The Market Is Beginning to Mend
According to the Cromford Market Index (CMI), the prediction for prices is starting to increase. This indicates that the market is finally starting to mend. Prices are beginning to appreciate, which is good news for investors.
If you are going to buy a property during a seller's market, the best time is at the start. You do not want to buy a property at the end of a seller's market. Currently, CMI shows that we are still at the beginning of a seller's market. Prices have not returned to a balanced state or a buyer's market. Because of this, it is better to hold onto a property for now and wait until the seller's market peaks to sell it.
Rental Rates and Property Appreciation Is Increasing
If you own a rental property, renting it out will continue to bring in a continuous revenue stream. Rental rates have increased by 7.4 percent since this time last year. There was a spike in prices during the last two months, so rentals are now bringing in an average of $1.05 per square foot. The median rent increased to $1,635 this week from $1,625 the week before.
When dealing with the uncertainties of the COVID-19 pandemic, it is important to find ways to mitigate your risks. People always need a place to live, and tenants are paying more than before for the same rentals. As rental rates continue to increase, property owners can use the revenue to pad their nest egg, reduce their risk level and plan for future investments.
Rental rates are increasing, and homebuyers are scouring the market for properties available in their price range. For homeowners and landlords, the seller's market is poised to take off. Meanwhile, the new applications for unemployment benefits have fallen steadily over the last few weeks. By continuing to rent your unit, you can bring in revenue as rental prices and the overall economy continue to improve.
If you have any questions about income or anything pertaining to Phoenix property management, please contact us at Service Star Realty.
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