With rent up 10 percent for homes in the Phoenix metropolitan area over the past year and Valley apartment rates up 8 percent over the same period, developers are eyeing new apartment construction projects in many Phoenix neighborhoods.
Many might believe rising rates are due to Millennials and boomerang buyers snapping up their own home. However, all rent rates, including those of condos and homes, have been rising for several years now in almost all Valley communities.
Consequently, a great number of individuals are choosing to buy instead of rent. For example, two home owners, Billy Day and Jessica Simms, decided to buy in Scottsdale instead of renting, and they’ve been happy with their decision due to their home’s proximity to work and other attractions.
After conducting a careful financial analysis, Simms determined purchasing was simply a “better financial decision,” he said in an interview.
According to an April report from the Arizona MLS, monthly leases increased 10 percent to $1,454 year-over-year. In another example, Yardi Matrix says apartments are up eight percent for the same period in the Valley, and that makes the area’s rent increase the seventh-highest in the United States.
Today, renters in the Phoenix area are paying almost a thousand dollars per month on average.
With rent rates skyrocketing, tools like Street Scout are invaluable for helping renters and buyers identify their next home. The tool offers property images, guides to neighborhoods, quality data, and expert guidance to help individuals search the whole area for the property that is right for them.
Street Scout shows residential rents rising fastest in Scottsdale, Phoenix, and Tempe. The commercial rent markets show similar trends.
According to information accessed through Street Scout by Information Market, for example, the Cherry Lynn neighborhood, which is at zip code 85014 in Midtown, Phoenix, witnessed rent increases that exceeded 50 percent last year; consequently, this was the highest increase of any neighborhood in the Phoenix area.
Due to current trends, finding affordable rent in the Valley area can be a challenge in today’s world. Likewise, buying isn’t much easier as investors who snapped up cheap properties during the financial crisis are now looking forward to high rates in the long run.
With the spike in demand, apartment developers are now launching new projects throughout Tempe, Scottsdale, Phoenix, and areas of Chandler in an attempt to leverage the opportunity that the prevailing situation presents.
As the supply of properties on the market increases, rents could start to come down. As long as there is not another spike in demand, therefore, renters should be able to look forward to a reduction in rent rate increases in the years ahead.