Despite a strong spike in the housing market (to the tune of about a 35% increase in home values), the market is now suffering from a supply and demand problem. The lower supply of houses on the market has, however, scared off cash investors turning houses into single-family rentals. With fewer houses on the market and fewer houses expected to be available for rent, it could mean a little upswing in the multifamily housing market.
While the area saw vacancy rates in the double digits for most of 2012, those rates have dipped back into the single digits leading into 2013 with about a 91.4% average occupancy rate.
The numbers for average rent rates vary slightly, but they are generally hovering around the mid $700’s to low $800’s coming into 2013 and remain well under $1 per square foot, although this varies quite a bit from neighborhood to neighborhood, with Scottsdale and Laveen taking the top two spots in rent prices at over $1100 per month.
Rental rates have remained relatively steady over the last year but residents can expect a slight climb throughout the year as the housing market recovers and irons out any residual problems. However, any minimal hike in rent will likely be short-lived.
Given the increase in demand for multifamily housing (albeit somewhat slight), it’s still an attractive market for investors and builders. As apartment supply across the nation is expected to hit a 4-year high, this ultimately means we can expect a rise in vacancies and thus rental rates should even out.
While the housing market is in recovery and expected to continue to grow, this doesn’t necessarily mean a dip in the multifamily market as homebuilders march in to meet demand. Phoenix is one of the lucky cities across the nation with a growing job market. This makes it a perfect breeding ground for growth in both the single family housing market and the multifamily market.