Out of Hiding- Vacation Rentals Hit the Market

“Where have all these beautiful listings been?”  I said to myself as I started my 10th day of “quarantine” back in mid March.  I was running the “hot sheet” of new listings and couldn’t believe what was showing as “new listings,” in Phoenix.  Super cute, well decorated, fully upgraded homes with lovely yards in pretty great locations.  Why were they all hitting the market in the midst of the pandemic?  Where had all these homes been hiding? Why were a majority of them selling as furnished?  Wait, why have I seen these homes before?

Listed by DPR Realty LLC, Zach Silvernail

It’s no secret,  the supply of first-time-buyers priced homes has been dwindling, or should I say, almost non-existent for the last few years in Phoenix and especially at the beginning of 2020.  Every new listing (that was priced right and looked nice) had multiple offers within hours, over ask, often without any contingencies or concessions.  Central Phoenix* had become an area I no longer pointed new home buyers towards as prices and competition would inevitably lead to heartbreak and less quality for the money.  Observing the market and what first timers were stacked up against, I wrote an article, “Starting Stacked,” as a realistic view on what to expect when buying for the first time in Phoenix.  Single family homes in Phoenix were out of the price range and often bought with cash, which was hard to compete with even when a buyer had a 20% down payment.

Listed by DPR Realty LLC, ZachSilvernail

So, the sudden influx of single-family homes was a little confusing to say the least. When I dug a little deeper (looking at the ownership classification in the tax records and reviewing the history of the home through sales) it showed the homes as rental properties and as I suspected, I had seen the homes before on Airbnb, VRBO, etc.

With tourism severely impacted by Covid-19, vacation rental owners are all but panicking as their mortgages come due on their primary residences as well as one to many rental properties.  Many vacation rental homes are pure investments and often owned by an investor or investment group that contracts out the management of the home.  Just as we saw a race to sell in the stock market, we are seeing  investors try to sell off as their projections for 2020 rentals are not as strong as resale prices.

Listed by Realty ONE Group, Maggie Wu

Now, before we all get excited about getting a deal, let me give you a little market recap for the Phoenix area.  We have been at incredibly low inventory levels for all of 2019 and 2020 thus far, the demand for housing far outpaces the supply and prices continue to appreciate.  Over the last 12 months in Greater Phoenix, prices have appreciated an average of 6.8% which is fantastic news, especially when comparing it to your 401K.  While the inventory was looking great there for about a week, it has returned to it’s normal slow and steady pace of new listings, meanwhile, demand has softened just a bit.  Even with more inventory, which we desperately needed, there is still more demand in the market than there are homes, therefore, we are still in a sellers market and prices are still climbing.

Listed by Realty ONE Group, Maggie Wu

deal can be thought of more in the terms of the contract- negotiating closing costs, negotiating repairs after an inspection, buyer contingencies to sell being accepted, etc.  The mere fact that more homes are available and they look great is the major win here.  You are competing with less investor cash as investors hold off on purchases and for those who are financing, rates are still relatively low, another win! Also many of these vacation rental homes have had major updates to the systems- HVAC, roofing, pool, plumbing, electric, etc.- another huge win!

Listed by HomeSmart, Amy Williams

Many people have asked me if I’m still showing homes or taking clients out since Real Estate services are considered “essential” under the executive order to stay home.  The answer is no and yes.  No, I am not taking new clients out or anyone who doesn’t have an immediate need for housing that has to be solved within the next 2 months.  Yes, I am meeting existing clients at homes, once the client has taken a virtual tour, examined all photos and information and driven by the home and around the area.  I wear gloves and a mask and recommend my clients wear the same protective gear.  I have a “no touch” policy, where I open everything and turn on all the lights and the client just walks through the home without touching a thing.

When this pandemic period ends, and it will, I don’t think we will be “business as usual,” but I do believe we will see tourism numbers increase as the economy gets going again.  Once tourism is back, even mildly, I don’t think we will see vacation rentals for sale as plentiful as right now.  There are ways to continue the purchasing process during the stay at home order, consult with your real estate professional or fill out the contact form below with your situation, questions or comments.

Listed by HomeSmart, Amy Williams

*When I mention Central Phoenix, I am talking about the following zip codes- 85003, 85004, 85006, 85007, 85012, 85013, 85014, 85015, 85016 and a “first-time” budget of $250,000-$350,000.

***Cromford Report Commentary


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