The Cromford Report Daily Real Estate Market Update for October 11 for Gold Canyon and the entire Phoenix area...
There are three options offered by the state of Arizona when a buyer is filing their Affidavit of Value for a home they are purchasing:
- To be used as a primary residence.
- To be rented to someone other than a qualified family member.
- To be used as a non-primary or secondary residence.
One of these is supposed to be selected for single family residences, condos, townhouses, 2-4 plex, mobile home or manufactured home.
The exact wording may differ as there are a large number of variants of this form. Recently we have seen a few forms with options B and C reversed which caused some unnecessary confusion.
The biggest problem for us comes with buyers who are neither intending to occupy nor rent out the home. Typically these are fix and flippers of some kind. "None of the above" would be a handy option, but this has not been available as a choice. Until 2012 option C was not available either and these fix and flippers would almost always choose option B. Increasingly we are seeing a minority of flippers choose option C. Ideally we would have liked to see all investors use option B so we can keep track of investor activity accurately. In 2015 we see investors use option C in about 10% of cases, and the percentage appears to be growing. In the current situation option C is clearly being over-used which therefore over-states the level of purchases of vacation or second homes and under-states the level of investor activity.
Over time, we try to correct for these mis-recorded affidavits as much as we can, but, as is often the case, interpreting real estate data can be a very messy business, and it takes time for us to fix the problems. With over a million documents recorded a year in Maricopa County alone, the challenge is significant.
This month we see light at the end of the tunnel, because we have seen the first affidavit with a fourth option:
D. To be used as an investment property
Assuming this format of document becomes widespread, future analysis of intended use will become easier.