Tucson CAP rates beat Phoenix, California and the Southwest States. This is the best time to buy investment properties in 10 years and here’s why.
The commercial housing market has rebounded! After the 2008 housing crisis, the market for multifamily properties both nationally and in Arizona fell off dramatically. property values plummeted record lows. Finally, 10 years later, the market for multifamily properties has bounced back in Arizona.
The rate of personal apartments and investment properties sold in Phoenix area is the highest since not only the beginning of recession, but in the last decade! In 2015, the average sales price for one unit in the Phoenix area was about $70,000. Since, this rate has increased by 36% in just one year, and now the average unit is selling for around $106,000.
Average rents have also increased about 20% in the Phoenix area since 2015. This combination of increased rents and surging property values have now incentivized developers to start building multi-family investment properties for the first time since before the crash. In Phoenix, 21,000 multifamily units are set for construction in 2016 which is a 30% increase compared to the previous year.
But here’s the really good news!
In Tucson, the market is exploding. Vacancy rates in Tucson are down to around seven percent, while net rental rates have increased to about 5% compared to 2015. The unemployment rate in Tucson has lowered about .7% in just the last year due to the creation of about 13,000 new jobs in the area. This is increasing the demand for multi-family in the area as net job growth in Tucson continues to follow the trend of positive growth. This will create opportunities for building new housing developments in Tucson, something which has sadly been lacking for much of the Great Recession.
The Tucson market has become a particularly attractive area to invest in due to the significantly higher cap rates on our properties than in both neighboring communities and other states. The turnaround of the market makes it a better time than ever to invest in multi-family in Arizona and properties are selling quick. Don’t miss out!