Housing investors busy in Tucson as distressed properties hit market

Distressed properties abound; residents struggle with payments
2013-05-06T00:00:00Z 2013-05-06T10:33:03Z Housing investors busy in Tucson as distressed properties hit marketGabriela Rico Arizona Daily Star Arizona Daily Star
May 06, 2013 12:00 am  • 

In one out of every four households in Arizona, residents are struggling to pay their rent or mortgage, a new national study shows.

And that distress makes Arizona very appealing to investors who are snapping up property in the Tucson and Phoenix markets, says another.

Tucson ranks 10th among the top 25 cities for profits from house flipping. Phoenix is third.

With the exception of Denver, Detroit, Las Vegas, Nashville and Seattle, the rest of the cities were in California and Florida, the report from RealtyTrac Inc. shows.

Meanwhile, the Center for Housing Policy's annual Housing Landscape report finds that in 25 percent of Arizona households, more than 50 percent of income goes to paying the rent or mortgage.

"There is opportunity in the market because there are still distressed homeowners," said Ginger Kneup, a Tucson residential-market analyst and owner of Bright Future Real Estate Research LLC. "There are people in the market who need to sell quick and cheap."

The percentage of people struggling with their household expenses is troubling, she said.

"It speaks to the depth of the problems caused by over-lending," Kneup said. "These are likely people for whom homeownership was probably not the best idea in the first place."

Janet Viveiros, a research associate with the Center for Housing Policy, said the report was generated to "bring awareness to the issue of housing affordability."

"It's a pretty large number to have one-quarter of your households spending more than half of their paychecks to keep a roof over their heads," she said. "That requires them to make really tough decisions on how to spend their money."

California had the highest percentage of households spending more than 50 percent of income on rents or mortgage - 34 percent. South Dakota had the lowest at 9 percent.

The report looked at working households - where at least one member of the household works a minimum of 20 hours per week, earning no more than 120 percent of the median income in the area.

Good news, bad news

The picture painted of the local economy by both reports shows we are still struggling out of the Great Recession, but that recovery has begun, said Marshall Vest, a University of Arizona economist.

"They are two very different facets of the housing market," he said.

"I'm certainly not shocked by the idea that we're one of the 10 least-affordable states," Vest said. "Concern about affordability is always an issue in Arizona, which is known as being a low-wage state."

On the flip side, having investors fix up properties is a good trend, he said.

"We have a large number of properties that have gone on the market as distressed," Vest said. "It's a favorable market for investors as prices are going up at a fairly rapid rate.

"This is a good game to play as long as prices keep going up."

Tucson Association of Realtors data show that in March, 35 percent of homes sold for cash.

"It is a positive, as well as a negative," said Cathy Erchull, the association's president.

"It does take distressed properties off the market, helping to revitalize neighborhoods," she said. "It restores property taxes to the city and county, and also helps with employment because most investors are not taking hammer to nail themselves."

The downside is for homebuyers who are looking to move up. "The investors are competing with the buyers that are out there looking for their new home and trying to get the best prices," Erchull said. "Inventory is down, and competition is tough so the owner-occupier may be paying a little bit more because of the competition.

Still, "it's a great time to buy whether you're an investor or homeowner," she added.

On StarNet: Read an online special section about the housing market's comeback at azstarnet.com/special-section/homes

Contact reporter Gabriela Rico at grico@azstarnet.com or 573-4232.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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