By: Audry Wolff, Associate Broker, Solutions Real Estate, Gilbert, Arizona
The Phoenix metropolitan area is a huge geographic area; however, it is laid out in a grid and once you are familiar with its numbering system you will find it quite easy to get around. Ground zero for street numbering starts at Central Avenue in downtown Phoenix and crosses the boundary of several East Valley cities: Scottsdale, Fountain Hills, Tempe, Gilbert, Chandler, Mesa, Apache Junction, and Queen Creek. A brief summary of each of these cities below will help you determine the best environment for your particular needs.
Scottsdale is arguably the most recognized of all the East Valley cities. A popular vacation destination with world class shopping and resort hotels, Scottsdale hosts several well-known annual events including a PGA golf tournament, a horse show at Westworld and the Barrett-Jackson classic auto show and auction. The most popular clubs and restaurants are located in the Old Town Scottsdale area, while the most scenic area (and priciest) is North Scottsdale with higher elevations and beautiful mountain and valley views.
Fountain Hills, located just east of Scottsdale, offers excellent views of both the McDowell Mountains and Red Mountain. Because it is bordered by Indian reservation property, Tonto National Forest, and the McDowell Mountains, Fountain Hills retains its hometown character and is characterized as a bedroom community.
Tempe is a thriving community of 166,000 is located just southeast of Phoenix and Sky Harbor Airport. Home to Arizona State University and the Sun Devils, Tempe played host for many years to the Tostitos Fiesta Bowl (it was moved to a new stadium in Glendale in 2007). Tempe still hosts the Insight Bowl and has one of the largest block parties in the US on New Year’s Eve.
Gilbert has the distinction of being the fastest growing city in the East Valley. The population has nearly doubled since 2000, and currently stands at approximately 180,000. Although it is large and growing rapidly, Gilbert is still incorporated as a town rather than as a city; and it has the highest population of any area incorporated as a town in the United States. Remnants of old Gilbert still remain: some dairy farms and cotton fields can still be seen; but they are rapidly giving way to housing developments. Gilbert has been named one of the top places in the U.S. to raise children and has an excellent public school system.
Chandler, the high-tech oasis of the Silicon Desert located in the southeastern part of the Phoenix metropolitan area. With such major employers as Intel, Motorola, Microchip, Freescale Semiconductor, and Mitel, the area provides approximately 15,000 high-tech jobs. Further energizing the community’s economy are Avnet, Toyota Financial Services, and major call centers and processing centers for Bank of America, Wells Fargo and Verizon Wireless.
It is no surprise that some of the best elementary schools in the country are in Chandler. Chandler High has an 80-year track record as one of the top academic schools in Arizona; Hamilton High, built in 1998, is one of the most technologically advanced high schools in the country; Basha High is one of the district’s newest high schools. Chandler has been identified by Alliance for Youth as one of the 100 best communities for youth.
Mesa is the third largest city in Arizona with more than 450,000 residents. Its low crime rate, excellent schools, diverse housing options, sunny climate and convenient location–just 30 minutes southeast of downtown Phoenix–appeal to families, retirees and part-time winter residents alike. The Phoenix/Mesa metro area averages 320 sunny days per year, and residents make the most of outdoor living. Northeast Mesa is located very close to the Tonto National Forest and the Salt River Recreation Area, where visitors enjoy camping, horseback riding, river tubing, off-road ATV trails and Jeep tours. The foothills in Northeast Mesa afford some beautiful mountain and city-lights views from homes perched on the hills.
Apache Junction is the easternmost community of the Phoenix/Mesa Metropolitan Area, and is located between the Goldfield Mountains and the Superstition Mountains, 2,070 feet above sea level. Each year the city welcomes over 35,000 seasonal residents, increasing the population from mid-October to mid-April to over 77,000. Despite its rapid growth, Apache Junction remains a city of wide-open spaces and a gateway to recreational areas including Canyon Lake and the Superstition Mountain wilderness. It has a territorial feel, reminiscent of the Old West. Housing includes single family homes, multi-family units and condominiums plus a number of established manufactured home communities for the over-55 crowd. Residents enjoy the many equestrian trails and many of the properties on acre-plus parcels are zoned as horse property.
Queen Creek and San Tan Valley residents enjoy the benefits of small-town living, excellent air quality and a variety of recreational activities, all elements of a low-stress lifestyle. Queen Creek is a family place, where the residents take pride in independence. It’s a “first name” community, where a person behind the counter isn’t an uncaring stranger, but someone who will know you by name. If you enjoy the great outdoors, Queen Creek is the place for you. You can ride a horse or hike into the mountains and across trails into the countryside. If a more relaxing time is your idea of fun, you can sit on the patio and view the San Tan and Goldmine Mountains to the south, and the Superstition Mountains to the northeast.
When considering purchasing residential property, consider your goals and objectives. Are you interested in an investment that you can fix up and turnover or “flip” for a tidy profit within a couple of months? Are you seeking a home you can rent out for the long term? Are you in the market for a second home or vacation home for yourself? Perhaps something that would be suitable for your retirement? Or, are you planning to live in the home full time as a owner-occupant? Depending on your resources, goals and objectives, you can approach this market in different ways, and done right, each can make you a tidy profit.
For instance, purchasing an investment property that you will only hold for a short time while you improve it can be an excellent way to make a quick profit. The most successful investors buy these properties at Trustee’s sales. They utilize the services of a real estate professional or third party advisor who does the legwork (determines if the property is occupied, the condition, status of the title, existing liens, etc.) and participates in the bidding process at the sale. This option is not for the cautious buyer as there is some element of risk involved, and buyers need to have a fair amount of cash (usually a cashier’s check for $10,000 to be able to participate in the bid process with the balance available within 24 hours). Assuming you can meet these requirements, your next hurdle is to fix up the property and get it resold promptly so you are not strapped with carrying costs. If you are holding the property for more than 90 days, it may turn out to be a loser.
A number of buyers have been snatching up homes in the Phoenix East Valley to hold long-term as rental properties. Record numbers of homeowners and renters alike have been ousted from their homes in recent years due to the proliferation of short sales and foreclosures. Excellent prices, combined with record low interest rates and a high demand for rental homes makes the cash flow equation ever-more favorable to the landlord. Furnished rentals are at a premium during the Winter months when tourism is at its height. Rental rates average $3,000 – $5,000 a month on a 4 bedroom 2 bathroom home, versus $1,200-1,800 a month for a year round unfurnished home. While there is higher turnover and increased cost for management on a furnished rental, the unit is typically gentled used and will retain its value better. The highest rents will be in the more popular tourist areas like Scottsdale, where the nightlife is always in high gear, and tourists come to town for nationally publicized events like the PGA Tour and the Barrett/Jackson Auto Show. Other areas like Mesa where there is a proliferation of public golf courses will also net a tidy profit on a furnished rental.
Snowbirds cause the population of the Valley to swell during Winter months. From October to April folks come from all over the northern U.S., Canada and sometimes even Europe to Winter in Arizona. Since property has become so inexpensive, many have chosen to purchase a home here versus entering a lease. There’s a wide variety of communities offering the security of gated entries which appeals to the part-time residents. For these second homeowners who may not be on a schedule requiring them to close by a specific date, some fantastic buys can be made with short sale transactions. Usually priced at the bottom of any comparable sales in the neighborhood, the short sale is typically occupied or very recently vacated, so a buyer has a higher level of comfort knowing that the major components of the property are in working order. The downside is the wait and uncertainty, because as you know short sales are anything but short when comes to waiting for a closing date.
Due to an overwhelming number of sales to investors with cash, the typical owner-occupant buyers who need local housing near their place of work ha oddly been left out of the Phoenix market. Several programs were introduced in mid-2010 to give preferential treatment on bidding for Freddie Mac/Fannie Mae homes on the market, and have served to even the playing field for owner-occupants. There is typically a 10- to 15-day “first look” timeframe where only bids from owner occupant buyers will be considered. In addition, the buyer that needs financing may get some help with their closing costs from Freddie and Fannie (as much as 3.5% of the sales price).
HUD homes are now prolific due to the number of FHA loans that have been made since the decline of exotic no- and low-down payment loans. The number of FHA-insured loans that have defaulted over the past 3 years has increased dramatically in Arizona. When a lender takes back an FHA-Insured loan, they have the option of holding it in their own REO inventory, or getting paid off by FHA, whereupon the property becomes a HUD home.
If you wish to bid on a HUD home, you will need to place your bid through a real estate brokerage certified to submit offers to HUD. Your agent will be able to confirm whether or not he/she is qualified. You may register yourself as a buyer on the HUD website but only your agent may place the bid online for you. HUD will choose the highest NET offer. For this reason, a cash buyer has an advantage over a Buyer that needs financing and wants HUD to pay some of their closing costs. Again, owner-occupant buyers are given a preferential bidding period. If HUD does not receive an acceptable offer after the first 12 days a home is on the market, HUD will look at all offers. Non-owner occupants should submit an offer as soon as the property is open to all bidders. An experienced real estate agent with local market expertise can help determine a winning net offer without leaving too much money on the table.
Prices vary depending on location, condition, age, and amenities. Whether purchasing for investment or as your own residence, it is always better to purchase an interior lot rather than one that backs to a busy street, school or commercial property. In Arizona, the North/South orientation is preferred so that the extreme midday heat hits the side of the house rather than the back or front yard. Winter residents typically enjoy a backyard with Southern exposure as they will get the most afternoon sun and warmth. Also particular to Arizona buyers, a single level home is favored over a two-level home. There are 2 reasons for this preference: 1) heat rises and air conditioners must work twice as hard to cool the upper level; therefore 2-level homes are not as energy efficient. 2) The aging population of Arizona prefers a home without stairs. Arizonans also love a big garage. Two stalls is typical but because most homes are built on slab and do not have a basement, a 3+ car garage is preferred for anyone wanting extra space for storage. And finally, with summer temperatures exceeding 105 degrees most days, a backyard swimming pool or access to a nearby community pool is a very desirable amenity. However, when choosing a distressed property beware of homes with pools that have been left empty for an extended period. Plaster cracks are common on empty pools and are very costly to repair.