According to Steve Martel, an Ottawa-based investor and lecturer who specializes in foreclosures in the U.S., Arizona continues to be a red-hot market to invest in based on three main factors: baby boomer statistics, job growth and population growth.
He has, to put it conservatively, crunched some numbers. "There are 78 million U.S. baby boomers, 9.6 million Canadian baby boomers and one billion worldwide (30 per cent of the population)," says Martel.
"When surveyed, 51 per cent of North American baby boomers would like to move to a better climate. Of those 44,675,000, 41 per cent (18,763,500) want to move to the south Atlantic region, and 32 per cent (14,296,000) want to move to the western part of the U.S. (Arizona, Nevada and California). And all told, 58 per cent of the boomers want to move to a onelevel, smaller home (50,808,000)."
Martel's conclusion: "Close to 5,000,000 people are looking to move into a bungalow/condo in Arizona over the next 10 years."
To enhance matters, he points out, Arizona and the entire U.S. is going through a housing shortage, citing Lawrence Yun, chief economist of the National Association of Realtors: "Home builders must add 1.6 million to 1.7 million housing units each year to accommodate typical U.S. population increases and replace demolished homes."
Below are the numbers Martel has uncovered for housing starts by year since the market took a turn in 2006. "We need to build at least 1.6 million homes a year," he adds. "Just to keep up with population increase."
While no one claims to know if real estate has bottomed out in Phoenix or Arizona as a whole, for Martel it's not significant.
"We know the full recovery will take some time," he says. "Economists predict 2014. But this is irrelevant. What is important is to buy right. You must determine your exit strategy, whether it's quick flip or a long-term rental hold, it's important to leave equity in the deal at today's market value, not subprime market value."
He says he teaches investors to always leave 65 per cent equity after all costs (including rehab) and acquisition costs. "So if we buy a $100,000 home, make sure to be all in for no more than $65,000. This will enable you to rent and cash flow, and take a huge appreciation ride when the markets recover.
It's the perfect storm out there, real estate is 70 per cent off their prime, properties under $100,000 are cash cows during the time we sit and wait for the market to go back up, and cash in on hundreds of thousands of profit per property in 10 to 20 years from now."
For the full article, showing you where to invest, pick up a copy of the November issue, on newsstands Oct. 11.
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Investment Hot Spots:
Sainte-Justine-de-Newton, Colonsay, Lapland, Sandhurst, Leslieville
As it turns out Steve Nash isn't the only Canadian making it big in the Arizona desert. But while the two-time NBA most valuable player from Victoria, B.C., continues to scorch the Phoenix basketball court, most of his compatriots - and there are plenty - are more than content to find success and security in the south-western U.S. without drawing a bead of sweat.