Rental prices in the Phoenix metro, like home prices, are skyrocketing- making it challenging for people to find housing across the board. Parallel with the housing market — there are fewer rentals available and too many people who want them. As I like to say, “The only market in Phoenix tighter than the residential resale market is the rental market.”
If you’re looking to buy rental property in the Valley of the Sun, you’ll find this story useful as we look at what’s happening in the market and how you can find your investment footing in one of the country’s fastest-growing cities.
READ ALSO: 8 of the best places to live in Metro Phoenix
The Red-Hot Rental Market
Recent data from Zumper shows Scottsdale, a sprawling city in the greater Phoenix metroplex, is the tenth most expensive market in the country. The report shows that in September, the median rent for a one-bedroom apartment in Scottsdale rose to $1,850 – a 24% increase over a 12-month period.
In fact, Zumper reports that much of the Phoenix metro has experienced rent surges over the last year.
2020-2021 Year over Year Rent Growth
Phoenix: | 22% |
Mesa: | 21% |
Glendale: | 23% |
Gilbert: | 25% |
Source: Zumper National Rent Report
Housing Market Flooding the Rental Market
What was once considered a sleepy western town, Phoenix is now one of the fastest growing cities in the nation. Droves of new residents boosted Phoenix’s population by over 20% in the last 10 years. The pandemic further induced the metro’s population boom, turning an affordable city into what’s becoming one of the most expensive housing markets in the country.
Latest data from the Cromford Report shows the monthly median sales price for a single family home in the Phoenix area now sits at $410,000 versus $326,800 this time last year – a 25% increase.
In this seller’s market, there is not enough supply to meet demand, pushing would-be traditional homeowners to become temporary or permanent renters. With that said, the rental market is hitting a breaking point as those homeowners compete with traditional renters for housing.
In Maricopa County, there is a 97% percent occupancy rate on rentals – the highest rate in 50 years. The Arizona Multi-Housing Association reports it expects to build up to 12,000 units by the end of this year, with the same amount also in the works for 2022, which is still far below the demand for such housing.
Recent Cromford analysis also states that iBuyers, property flippers and investors are making most of the property purchases as of late instead of folks who’d buy their own home and live in it. This indicates more competition between rental property buyers as many see purchasing rental…
Read More: Why the Phoenix rental market is worth the investment