Your Phoenix rental market update

It’s time to face brass tacks. What does that saying mean, anyway? I don’t know but I do know this: renting in Phoenix is getting more expensive.  It’s not even getting more expensive at a gradual rate either.  The ball has started rolling and economists don’t anticipate slowing in the next couple of years.  So what is going on and how in the world did this happen so fast? It was not long ago when it seemed like many complexes were giving away free months of rent as a move-in incentive. Those days are no long gone.

Where we are right now:

Average rent for a single-family apartment unit in the Phoenix-Metro area reached $1,275 in the month of May 2012.  The median rent has hit $1,125.  With the average and the median rate so close together, we can see that rents are going up across the board, rather than being skewed by a handful of mega-pricy units. Rent in Phoenix is extraordinarily expensive compared to the national average of just $865 for relatively the same unit. Remember that this number includes rental prices for podunk towns in Iowa, as well a New York City brownstone.

An astounding and record setting, 3,061 new leases were signed by renters last May.  The four previous months of the year also marked all-time highs, but the month of May topped them all so far. Nationally, vacancy rates of rental units dropped to 8.8% from 9.7% just one year ago.  For those of us on the West coast, vacancy rates are hovering at just 6.3%. All of which means, competition for a good place is fierce!

Why? Why!

Since the onslaught of foreclosures began dragging down the economy in 2006, 4 million more Americans joined the rental market. Phoenix unfortunately took the nasty title as one of the hardest hit cities in the nation.  The more foreclosures in our city, the more families there have been to pack up their U-Haul and moved in your complex next door.

Phoenix is also the second quickest city to rebound from the abysmal real estate situation.  We had so many foreclosures that home values plummeted, which was as good as blood in the water for hungry investors looking to snap up crazy, inexpensive homes.  All of these homes are now hitting the market as rentals to meet the needs of Phoenix residents.  Though the increased inventory should help drive rental prices down, there are so many Arizonians on the rental market that prices are still on the rise.

It can be hard facing the facts sometimes, but it is also better to be aware of the unique conditions we are all confronted with these days.   Tuck away a bit of extra cash each month to create a buffer when they increase your rent, or start shopping for a less expensive place.  Hold on and we’ll get through this in no time.