It’s no secret that Arizona is one of the fastest-growing states in the US. Large numbers of people from all over the country are flocking to cities like Phoenix, eager to experience a better quality of life at a lower cost. Even during the pandemic, when domestic migration rates across the country slowed down, Phoenix continued to soar.
Now, Phoenix is more than just a place for homeowners looking for a change of scenery. It has transformed into a hub for savvy investors who want to capitalize on the city’s abundant opportunities.
Whether you’re a buyer or investor, owning a luxury home in Phoenix offers a myriad of benefits. Let’s explore these benefits in this blog post.
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THE ALLURE OF PHOENIX, AZ
Located in the heart of Arizona’s Maricopa County, Phoenix is a sprawling city of over 1.6 million residents. Known for its desert landscape and world-class attractions in golf, art, food, and drink, the Valley of the Sun offers an endless array of things to see and do.
If you’re considering investing in luxury real estate, it’s essential to look at more than just homes. Lifestyle and culture play a key role in real estate, as do current market trends, economic conditions, and financial climate.
Phoenix excels in all these areas, making it a prime location for luxury real estate investors. The city’s strong economy and high quality of life are likely to continue attracting new, highly discerning homebuyers, driving up the demand for upscale homes.
What separates Phoenix from other luxury real estate markets in the country? We explore the answers in this blog post.
Exclusive lifestyle and amenities
Luxury is more than a price tag – it’s also about the lifestyle, amenities, and exclusivity of the neighborhood.
Phoenix caters to those with discerning tastes, providing a range of upscale amenities that embody the essence of luxury living. The city offers a plethora of world-class golf courses, luxury resorts, fine dining options, and upscale shopping districts that elevate the experience of living in the Sonoran Desert. Luxury properties often come with access to these exclusive experiences, creating an attractive proposition for potential buyers.
Stunning desert landscapes
Location is king in any property, but especially when it comes to luxury homes. Whether perched along the foothills of Camelback Mountain or bordering the serene desert landscape, luxury homes for sale in Phoenix, AZ offer breathtaking views and an unmatched sense of tranquility. Many homes offer panoramic vistas of the city skyline or the surrounding mountains.
High-end buyers are usually willing to pay a premium for a one-of-a-kind location, which can determine factors like access to the best amenities or the property’s sense of privacy and seclusion.
Economic growth and diversity
Home to several Fortune 500 companies and a highly educated and skilled workforce, the Greater Phoenix Area has a strong and diversified economy. Not only does this drive demand from business owners and investors, but it also makes the city a prized address for young professionals and families looking for the right home amid robust employment opportunities.
Zooming out to Arizona, you’ll find a highly diverse economy with flourishing businesses in sectors like aerospace, finance, technology, and healthcare. This makes the economy less susceptible to market fluctuations and more attractive to investors.
Some of the recent business investments include Intel’s $20 billion expansion, which is set to create a total of 6,000 jobs. It’s also the largest private-sector investment in Arizona thus far.
Other factors that make Phoenix an attractive investment location include:
- High-earning population
Phoenix has shown tremendous recovery from the pandemic, providing as many as 2.3 million jobs in January 2023. Major commercial investments have established their presence in the area, attracting an influx of well-paid professionals and their families, which in turn sustains the demand for high-end housing.
- Low property taxes
Arizona’s tax-friendly environment is a gold mine for real estate investors. In Maricopa County, the government collects property taxes at a mere 0.59% of a property’s market value – which means you get to keep more of your hard-earned profits in your pocket.
Additionally, Arizona does not levy a real estate transfer tax, so you won’t have to pay fees for transferring ownership of a property. These benefits not only make investing in real estate more financially appealing but also simplify the process, allowing you to focus on the growth of your investment without the burden of excessive taxation.
- Infrastructure expansions
Infrastructure is paramount to the growth of any city and Arizona has strategically invested in its infrastructure over the years. This has set the stage for a dynamic environment that attracts businesses, residents, and investors alike. The state has made significant investments to its airport infrastructure, including the construction of a Sky Train extension amounting to $700 million. Multiple projects geared towards the improvement of the state’s roads, bridges, and public transportation systems have also been put in place.
- Multiple financing options
The availability of financing options is another crucial factor to consider when investing in luxury real estate. In this regard, Phoenix is the ideal location – it has a strong and diverse financial sector, which includes several banks, credit unions, and financial institutions that provide potential investors with a range of loan products to suit their specific needs. - Booming tourism industry
Phoenix’s tourism industry is another driving force behind the luxury real estate market. The city hosts numerous events and golf tournaments, plus, it’s a popular winter destination for snowbirds. With a steady influx of tourists, there’s a demand for high-end accommodations, making luxury real estate a sound investment for those looking to cater to the affluent traveler.
- Opportunity for investment diversification
Luxury homes for sale in Phoenix, AZ offer the opportunity to diversify your portfolio with a stable investment. In general, real estate investments have a lower correlation with traditional financial assets such as stocks and bonds, which tend to be more volatile. Investing in real estate can help you weather the storm during economic downturns.
In particular, high end properties tend to keep their value even when the market is down, as generally, the spending power of luxury home buyers are not as affected by inflation and other economic conditions as regular home buyers. Historically, it has been proven that the high end housing sector is the first to recover after a market downturn.
THE PHOENIX, AZ LUXURY MARKET
SOLD in Phoenix, AZ: 3-bedroom, 2-bathroom luxury home built in 2018
The Phoenix luxury real estate market is booming, despite rising interest rates and a slowdown in the general housing market. Houses priced $1 million and up – the typical price tag of a luxury home in Phoenix – are seeing plenty of activity. While rising interest rates hamper growth in entry-level and midrange homes, luxury properties are less affected since many buyers are paying in cash.
The Phoenix Metropolitan Area has shown significant year-over-year increases in luxury home prices. In September 2023, the median home listing price in Scottsdale was $950,000, up 5.7% year-over-year. Paradise Valley saw an even more dramatic increase, with the average listing price up 14.4% year-over-year to $4.6 million.
Luxury real estate trends
Despite a slight decrease in home values in Phoenix, market forecasts are predicting a 3.2% increase by September 2024. This bodes well for luxury investors – Phoenix is still a desirable place to live for many reasons, including its high quality of life, relatively low cost of living, and growing economy, which means the demand for high-end homes is expected to remain strong.
Seasonality also plays a role. The luxury market is expected to heat up once more in the last few months of 2023, as high-net worth buyers are expected to flock to Arizona in search of sunny weather.
Luxury buyers are also looking at specific features for their ideal homes. The spotlight is on new construction properties with contemporary design, with many buyers showing interest in open layouts, modern finishes, and smart home features. Spacious properties with large grounds are still in demand. Many would-be homeowners also tend to favor well-established properties with unique architecture and some history.
The best neighborhoods for luxury homes for sale in Phoenix, AZ
Whether you’re looking to purchase and hold luxury homes for long-term appreciation or flip them for a quick profit, Phoenix is a market that you should have on your radar. Here’s an overview of the best neighborhoods in Phoenix for investing in luxury homes:
- Downtown Phoenix
Downtown Phoenix is a vibrant urban center with something to offer everyone, from students and tourists to professionals and families. There’s a wide range of sports, entertainment, and arts and culture options to enjoy, as well as a burgeoning restaurant scene. This makes Downtown Phoenix a great place to invest in a rental property.
- Biltmore
Biltmore is a luxury enclave that’s home to a variety of single-family homes, making it a lucrative opportunity for investors with a long-term horizon. The centrally located neighborhood boasts easy access to the vibrant Camelback Corridor and proximity to neighboring areas like Paradise Valley and Scottsdale.
- North Central Phoenix
One of the most highly desired neighborhoods in the city, North Central Phoenix is an excellent investment location, whether you have your eye on a long-term single-family home or a rental property. The suburban oasis offers a mix of city and nature, with miles of hiking trails, lush mature trees, and plenty of city amenities, including restaurants, shopping, and entertainment options.
TIPS FOR INVESTING IN LUXURY REAL ESTATE
While it’s more stable than other financial assets, real estate is still an investment, and as with any other investment, real estate also carries risks. Before purchasing a luxury home, be aware of the following considerations:
- High vacancies. Luxury real estate is a niche market, with fewer potential buyers or renters than lower-priced properties. It may take longer to find qualified buyers or tenants for your property, especially if the market is saturated with similar properties or if the demand is low. High vacancies can reduce your income and increase your expenses, as you may have to offer incentives or discounts to fill your property. To combat this, make sure you’re investing in an area with high demand and sustained growth.
- Lack of liquidity. Real estate isn’t a liquid asset, meaning it’s not easy to sell quickly and convert into cash. It may take months or even years to find a buyer for your luxury property, especially if the market is slow or there’s too much competition among sellers. You may also have to lower your price or offer concessions to sell your property faster.
- Unpredictable market. The real estate market can change quickly and unexpectedly, affecting the value and profitability of your property. Factors like supply and demand, economic conditions, interest rates, and even global events can impact your investment, so make sure you’re keeping up to date with the local market.
Fortunately, with the right practices, you can ensure the success of your luxury real estate investment. Here are some practical tips to help you make the right decisions:
- Be thorough in your research
Before you dive into the luxury real estate market, make sure you’ve done extensive research on the neighborhoods in Phoenix, paying attention to current market trends, property values, and potential for growth.
Look into the legal and financial aspects of the property, such as zoning regulations, property taxes, and any outstanding liens. Working with a real estate professional comes in handy, as they can help you understand the ins and outs of the local market and provide expert advice.
- Don’t skip the property inspection
It’s important to insist on a comprehensive property inspection by a qualified professional. Luxury properties often have unique features or require specific maintenance, so it’s essential to be aware of any potential issues before closing the deal.
Don’t be afraid to ask about future development potential, as well as any remodeling or customization that may be needed to meet your vision for the property.
- Explore a range of properties
When investing in luxury real estate, take your time and explore a variety of properties in different Phoenix neighborhoods. Each area in Phoenix offers a unique lifestyle, from a vibrant urban atmosphere to serene desert retreats. Consider factors like proximity to top-rated schools, shopping, dining, and cultural amenities when making your choice.
- Make sure you’re financially prepared
Before making an investment of any kind, it’s crucial to ensure you have a solid financial plan in place. Luxury properties come with high upfront costs and ongoing expenses, including maintenance, property management, and taxes. Explore financing options, and be ready to act when you find the right property to avoid missing out on a lucrative investment opportunity.
- Negotiate wisely
When you find the luxury property you like, be prepared to negotiate. Your agent can help you structure a competitive offer that aligns with the current market conditions. Timing is also key, so it helps to wait for the right time to strike.
- Collaborate with a seasoned real estate professional
Partner with a real estate agent who specializes in luxury properties – they can provide you with valuable insights into the Phoenix market, access to off-market listings, and expert assistance in navigating negotiations. A local agent can be especially helpful in understanding the nuances of the Phoenix luxury real estate scene, guiding you towards the most promising and lucrative investment opportunities.
EXPLORE LUXURY HOMES FOR SALE IN PHOENIX, AZ WITH JULIE PELLE
In search of your dream home Phoenix, Arizona? Join me, Julie Pelle, in exploring the finest properties in the Valley of the Sun.
For over 18 years, I’ve created a successful career in real estate, crafting tailored solutions and ensuring a seamless home-buying journey for my clients. If you’re thinking of investing in a luxury home, I can help you find the property that’s perfect for your goals, whether it’s a custom country club home or a secluded estate.
For a personalized consultation, contact me at 480.323.6763 or send an email here.
