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Property Investors Seize Arizona Home Foreclosures - 19 October 2009

With year-round sun, lush golf courses and a growing retirement community, Arizona is becoming the new Florida. The Southwest has experienced one of U.S.’s highest rates of population influx in recent years, even higher than the traditionally popular California and Florida coasts. What’s driving these transplants into the dry, arid terrain: Affordable property.

Arizona has been at the crux of a foreclosure explosion—one in every 150 housing units received a foreclosure filing in August. Auctions that once attracted about five people now see as many as 70, as property investors snatch up homes that average $134,000 in the state’s largest city, Phoenix. (In Florida, homes average about $147,400.) Investors and second-home owners made up more than 40 percent of property buyers in the Phoenix area this summer.

While prices are cheap, they’re also steadily rising, which coupled with low interest rates, are luring investors to cities like Maricopa, which grew from 1,000 residents in 2000 to 45,000 this year. The spacious, former agricultural base offers a cheaper alternative to Phoenix, 30 miles north. However, property in the big city also remains inexpensive: Average home prices in Phoenix have fallen nearly 50 percent since the 2006 peak, the biggest drop in any U.S. metropolitan area.

Big-spending investors see the greatest potential in Scottsdale, an Arizona city 25 miles northwest of Phoenix. Described as a “desert version of Miami’s South Beach,” the city is noted for its 170 golf courses, luxury spas and high-end shopping, not to mention the numerous outdoor activities that the surrounding landscape allows, like mountain climbing, horseback riding and kayaking. The median sales price for a home in Scottsdale was $305,000 last quarter.

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