Investment and Financial Markets

What Percent of New Home Sales Are Investors in Arizona?

Uncover the dynamics of investor activity in Arizona's new home market and the factors shaping its landscape.

Real estate investment significantly influences housing availability and affordability in dynamic markets. Understanding who purchases new homes is important, especially in rapidly growing regions. This analysis examines investor involvement in Arizona’s new home market, including the scale of their activity and contributing factors.

Investor Share of New Home Sales in Arizona

While precise data on the exact percentage of new home sales in Arizona attributed to investors is not consistently reported, available information indicates significant investor activity in the broader housing market, particularly in new construction for rental purposes. In the second quarter of 2023, investors accounted for 29% of all single-family home purchases in Arizona, making the state among the highest nationally for investor share. More broadly, investors purchased 16.8% of all U.S. homes sold in the second quarter of 2024.

The Phoenix metropolitan area shows specific investor trends. Although the overall investor share in Phoenix decreased slightly by 0.9 percentage points in the second quarter of 2024 compared to the previous year, investor presence remains substantial. A key aspect of new home sales to investors in Arizona is the robust “build-to-rent” (BTR) market. Phoenix is a leading national market for new single-family rental construction, with over 4,000 BTR homes added in 2023 and more than 7,200 currently under construction. This focus on BTR developments means a large portion of new home construction targets investor portfolios for rental income.

Understanding Investor Home Purchases

In the real estate market, an “investor” refers to any institution or business acquiring residential properties primarily for financial returns, not personal occupancy. This definition includes individual investors, small-scale landlords, large institutional investors, and specialized single-family rental operators. These investors engage in real estate transactions to generate profit or long-term wealth, often through rental income, capital appreciation, or short-term flipping.

In the new home market, investor purchases are driven by specific objectives. Many investors acquire newly constructed homes to capitalize on rental demand, aiming for steady income streams. Others pursue long-term capital appreciation, anticipating property value increases. The “build-to-rent” model, where homes are constructed for rental purposes, exemplifies new home investment designed to meet rising rental housing demand.

Sources of New Home Sales Data

Information on new home sales and investor involvement is compiled and analyzed by various providers. Common data sources include county recorder offices, which track property transactions, and builder surveys that capture new construction activity. Specialized real estate analytics companies, such as Redfin and CoreLogic, aggregate and interpret this data to provide insights into market trends and investor participation.

Collecting comprehensive data on investor activity in new home sales presents challenges. Determining if a purchase is for investment purposes involves inferring intent. Data collection can also face issues with consistency across different sources or potential reporting lags, making it difficult to obtain real-time, consolidated figures for specific segments like new home sales to investors.

Driving Factors for Investor Activity in Arizona

Several economic and market conditions contribute to Arizona’s appeal for investors in new home construction. The state experienced significant population growth, with a 1.3% increase from 2022 to 2023, pressuring the housing market and driving demand for new homes and rentals. This demographic expansion links to a robust job market, especially in metropolitan areas like Phoenix, known for strong growth in technology, healthcare, and advanced business services.

Sustained demand in the rental market further attracts investors. Elevated home prices and mortgage rates have made homeownership less accessible, pushing more people into the rental pool and increasing demand for rental properties. While rental prices in some Arizona cities show mixed trends, overall demand remains strong, particularly for single-family rentals. Developer incentives, including bulk purchase agreements for new communities, also facilitate large-scale investment in new construction. These factors create an environment that supports continued investor interest in Arizona’s new home sector.

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