The Scottsdale real estate market is one of the most promising investments with an impressive rate of return (or cash on
cash return) in 2021. The housing market there is booming, and everyone is buying properties, especially Airbnb rentals.
This article will show you the exact reasons why the Scottsdale, AZ real estate market is a great option and where the Scottsdale real estate cash cow is located.
Overview of the Scottsdale Real Estate Market 2021
Scottsdale is a desert city in Arizona. It is popularly known for its rich spa resorts and golf courses. Scottsdale has a long history of being one of the most significant real estate investments. It has a diverse market for both Scottsdale homes for sale and rent. Residents include celebrities, CEOs of Silicon Valley companies, tech giants, and athletes as well as new families and investors looking to make intelligent real estate decisions.
Scottsdale is a market with a population of over 250,000 people. The housing market forecast 2021 predicts that the prices of houses in Scottsdale will rise above the national average for real estate appreciation, making it a profit tank for early investors. The Scottsdale real estate market conditions are driven by high demand combined with tight supply, making the market competitive. So if you’re wondering will house prices go down in Scottsdale, the answer is no.
The Scottsdale housing market also has a good track record of appreciating over the years. The appreciation rate of houses in Scottsdale continues, and that is why investors are turning their gazes towards owning real estate properties there.
Based on Mashvisor real estate data, this is the current investment potential for both traditional and Airbnb properties:
- Median Property Price: $1,077,955
- Price per Square Foot: $395
- Average Traditional Rental Income: $3,356
- Average Traditional Cash on Cash Return: 2.72%
- Price to Rent Ratio: 27
- Average Airbnb Income: $3,165
- Average Airbnb Cash on Cash Return: 1.65%
- Average Airbnb Occupancy Rate: 63%
What Makes Scottsdale a Good Investment Location?
With the coronavirus outbreak and its rapid expansion across countries and territories in the world, most prospective house owners will share a distinct feeling of skepticism. However, owning a house in the Scottsdale real estate market still appears doable, especially with the following housing market predictions 2021. If you are looking to invest in the Arizona housing market, then this is for you.
Limited Inventory Equals a Fecund Investment Market
Like many others around the country, the Scottsdale area has received favorable housing market forecasts for 2021. As mentioned earlier, real estate supply and demand are the major pivots driving these predictions.
There are many potential homebuyers in the Scottsdale housing market, but there aren’t enough houses to go around which makes it a hot seller’s market. As of early 2021, this is a common occurrence in many real estate markets around the United States.
Realtor.com analysts released a housing market survey in March that showed how the total number of property listings had changed from the previous year. They provided data for the entire country and the 50 largest metro areas in the US housing market.
According to the survey, between February 2020 and February 2021, the total number of active real estate listings in the Scottsdale, Phoenix area fell by 62%. Thus, the overall number of new homes for rent has decreased significantly. This is one of the reasons why the 2021 real estate forecasts for Scottsdale are positive. A stark supply-demand imbalance pushes buyers to compete ferociously, placing upward pressure on home prices in the metro region.
In essence, the window of opportunity is open for real estate investors in the current housing market to invest in both short-term rental properties and the traditional rental market. If you’re thinking that the Scottsdale real estate market 2021 is the right choice for you, make sure to start your investment property search now, before home values become unaffordable.
Read More: Searching for Property in a Low-Inventory Real Estate Market: 6 Tips
Homes Are Selling at a Relatively Fast Pace
Mashvisor data shows Scottsdale listings were on the market for an average of 50 days towards the end of 2020. That’s 20% shorter than it was a year ago. The numbers are expected to get even more extreme in 2021.
According to Realtor.com, the median list price in the Scottsdale, Phoenix area real estate market increased by 17% in the previous year. All of these metrics point to a highly competitive real estate market with high buyer demand. The rate at which houses sell in Scottsdale is a major reason to invest in the area.
When you combine these with low inventory, it’s no surprise that the Scottsdale, Arizona real estate market is the investment location you have been waiting for. Meanwhile, a local housing market crash 2021 is not expected.
The Scottsdale Arizona Real Estate Market Value Is About to Go Wild
According to NeighborhoodScout, Arizona real estate will witness a sporadic rise in value from now till the end of September 2021. The rise is currently valued at 8.2%. This forecast should not be received with great shock, considering how Arizona has always witnessed an increased real estate valuation. The presence of the coronavirus has not in any way dampened the rise of the state’s current housing market.
Read More: Arizona Housing Market Predictions for 2021
The Ratio of Renters in Scottsdale, Arizona Is Set to Surpass That of Homeowners
With an average home price in Scottsdale neighborhoods like South Scottsdale being $659,766, while the traditional rental price across city level is an average of $3,220, the ratio of home renters in a growing market with unbelievable demand is set to go higher. Make a move to tap into the traditional rental market in Scottsdale, which already has average cash on cash return of 2.75% and a price to rent ratio of 27.
Read More: What Is a Rent Calculator and Why Do Real Estate Investors Need One?
The Rapid Population Growth in Phoenix, Arizona Fuels the Demand
Population growth is also positively affecting the Phoenix real estate market forecasts for 2021, as it brings in more potential renters and thereby increases demand for traditional rental properties. Remember that the Phoenix Greater Area is the home of Scottsdale. According to a recent survey by Freddie Mac, Phoenix-Mesa-Scottsdale has experienced above-average population growth in recent years. It was the second-fastest-growing metro area in the United States between 2017 and 2019.
Statistics by the U.S. Economic Census Bureau show that the population of Phoenix increased by 16.2% from 2010 to 2019. The population of Mesa, Arizona rose by nearly 18% during that same 9-year period, while Scottsdale experienced an 18.7% increase.
Tourism Is a Big Deal in Scottsdale
Airbnb Scottsdale offers lucrative investment opportunities
In 2017 alone, 4.5 million overnight tourists contributed $2.4 billion in city revenue to Scottsdale. For Airbnb hosts, this is a big deal as tourists always need a short-term rental when they travel to a different city. And Scottsdale isn’t short of tourist attractions and activities, including historic sites, hiking trails, museums, casinos, nightclubs, golf courses, and so on. If you are a fan of short-term rentals, you may want to consider investing in Scottsdale Airbnb properties.
Top Neighborhoods to Invest in Scottsdale, AZ
If you’ve been investing in real estate a long time, you most likely already know that investing is many times a game of locations. The same goes for the Scottsdale real estate market. Based on Mashvisor real estate data, here are some of the most profitable neighborhoods to invest your money in both traditional and Airbnb income properties:
South Scottsdale, AZ
One of Scottsdale’s most distinctive neighborhoods in South Scottsdale. The neighborhood, which is located between Tempe and the affluent North Scottsdale area, is popular among families with young children and millennials. The busy lifestyle of South Scottsdale is known for its breweries and restaurants along North Scottsdale Road and family-friendly activities. There are several art galleries in this city’s cultural and creative hub. The Scottsdale Greenbelt features a golf course, an artificial lake, and the McCormick-Stillman Railroad Park, which offers kids miniature train rides.
South Scottsdale has a semi-cosmopolitan feel with a lively and progressive mindset that is also family-friendly. South Scottsdale has a median home price of $659,766 and a wide variety of housing options, with an average Airbnb occupancy rate of 56%. Because of its proximity to Tempe, a college town, South Scottsdale has many nearby work opportunities.
Traditional Rental Properties
- Traditional Rental Income: $2,409
- Traditional Cash on Cash Return: 2.99%
- Price to Rent Ratio: 22
Airbnb in South Scottsdale has a cash on cash return of 1.76%. Investors are taking grab of the short-term rental opportunities South Scottsdale has to offer.
Airbnb Rental Properties
- Airbnb Rental Income: $2,599
- Airbnb Cash on Cash Return: 1.76%
- Airbnb Daily Rate: $332
- Airbnb Occupancy Rate: 56%
North Scottsdale, Arizona
North Scottsdale is a dream neighborhood for people who appreciate the finer things in life. The idea, in the first place, is that people go there to create memories. However, it has proven to be a perfect real estate investment option for investors over the years. It’s a great location for those just starting and those who have already made it, with a host of noteworthy communities. Troon North, for instance, is a massive master-planned golf neighborhood in North Scottsdale. Along the foothills of Pinnacle Peak, Troon North offers a peaceful lifestyle.
Another neighborhood in North Scottsdale, Arizona, is Gainey Ranch. The ranch is a beautiful community based on the Gainey Ranch Golf Club. Investing in Gainey Ranch means you are putting your money in a wealthy neighborhood that provides its inhabitants with a high quality of life. It’s also capable of attracting many short-term visitors, thus making it a great place for Airbnb Scottsdale.
The Grayhawk neighborhood is blessed with top-notch facilities and beautiful natural landscaping. There are plenty of parks for kids, as well as over 30 miles of trails. Maybe it’s time for you to provide people with the wanderlust access to Airbnb and traditional rental properties to get the best of experience from the North Scottsdale neighborhood.
Traditional Rental Properties
- Traditional Rental Income: $3,051
- Traditional Cash on Cash Return: 2.64%
- Price to Rent Ratio: 28
Airbnb Rental Properties
- Airbnb Rental Income: $2,843
- Airbnb Cash on Cash Return: 1.00%
- Airbnb Daily Rate: $155
- Airbnb Occupancy Rate: 43%
Pinnacle Peak, Scottsdale, Arizona
Pinnacle Peak is the sanctuary of wildlife in Scottsdale and Arizona at large. Airbnb hosts have identified Pinnacle Peak as the pinnacle of investments in Scottsdale because of how much the neighborhood attracts tourist activities. The neighborhood is perfect for hikers and rock climbers. It sits in a naturally endowed topography that encourages outdoor activities.
Traditional Rental Properties
- Traditional Rental Income: $4,865
- Traditional Cash on Cash Return: 2.80%
- Price to Rent Ratio: 28
Airbnb Rental Properties
- Airbnb Rental Income: $3,457
- Airbnb Cash on Cash Return: 1.17%
- Airbnb Daily Rate: N/A
- Airbnb Occupancy Rate: 62%
To effectively decide whether to invest in a long-term or Airbnb property in Scottsdale for 2021, one must consult the current real estate data. When data is mentioned, it simply denotes the city-level and neighborhood-level real estate metrics including important metrics like cap rate, cash on cash return, rental income, and many more. Knowing how the city you want to invest in ranks based on the yardstick mentioned above is the first step towards a wise investment.
Rules Guiding Airbnb Investment in Scottsdale
Airbnb is a fully legal business in the city of Scottsdale. The Arizona state legislature made short-term rental services legal in 2017. This ushered Airbnb into the Scottsdale real estate market. However, investors must take note of the following terms.
According to the law of Scottsdale, a short-term rental is a dwelling unit offered on a rental basis for 30 days or less to tourists or guests. The law enables Airbnb hosts to list single-family and multi-family properties as vacation rental properties.
Scottsdale law states that short-term rentals must be rented in their full form. Airbnb is not permitted to rent out units of the property.
- The Maricopa County Assessor’s Office is responsible for the registration of all short-term rentals based in Scottsdale.
- All houses rented from Airbnb should have a family size of 6 adults maximum, and children.
- Non-owner-occupied rentals are permitted in all residential areas of Scottsdale.
- In the event of any restriction on an Airbnb investment property, an investor should be notified in a Home Owner’s Association.
- All Airbnb investors based in Scottsdale are mandated to pay short-term rental taxes.
Read More: Airbnb Arizona Rentals May Face More Regulation
Are You Ready to Invest in Scottsdale Real Estate?
The homes available for sale in the Scottsdale real estate market will make excellent rental properties. When settling for a city to invest in, remember that Scottsdale is one of the finest places in Arizona. This is due to the excellent features that abound in the city. The single-family homes and apartments, alongside other buildings, offer prospective homeowners and tenants an exotic form of comfort.
However, real estate investment requires that you know the market and understand what location you should invest in, which is why you should use Mashvisor to analyze Scottsdale neighborhoods for the best locations available. Mashvisor will provide you with expert guidance on the current state of the real estate industry and give you the best options to optimize profit.
To start looking for and analyzing the best investment properties in the Scottsdale real estate market in 2021, click here.