Investors in the Phoenix rental market are enjoying high rents and a qualified pool of tenants. Today, we’re telling you why the rental market is performing the way it is in 2016, and what we expect going into 2017.
First, it’s good news for landlords and property owners that rental prices are on the rise. The higher rents are due to an inventory shortage in rental properties. There are fewer properties available on the market to meet the demand.
Factors in the Inventory Shortage
There are several reasons for the shortage of inventory. The main reason is that investors are selling their homes now instead of renting them out. Some of these investors have been upside down on their mortgages for a while, but now that values are climbing, they’re able to sell without losing money. A lot of our Canadian friends are also choosing to sell because the dollar is weaker in Canada, so they need to offset those costs. There are also a number of accidental landlords; people who became landlords simply because they couldn’t sell their homes and they wanted to avoid foreclosures and short sales over the last few years. They don’t have to be landlords anymore because the sales market is improving, so they are anxious to sell.
Strong Phoenix Economy
The job market in and around Phoenix is also really good right now. This has created an influx of people who are moving here from outside Arizona and adding to the shortage of available housing. Individuals who are part of Generation X or the Millennial Generation are choosing to rent instead of buy. That’s caused an additional shortage. And, we’re finding that there are a lot of extended leases. People aren’t renting for just one year; they’re renting for three or four, even five years. These are renters who want to stay in their home longer.
Rental Housing Statistics
In April of 2015, landlords were able to earn 75 cents per square foot of property. Today, they’re earning 82 cents per square foot, with the average rent at about $1,325 per month. In January of 2015, there were 3,300 new listings in the rental market. At the same time in 2016, there were only 2,596. So, that means for now we will continue to see a rise in rents and we don’t know how long this will last.
If you’re an investor planning for 2017, contact us at World Class Properties. We provide a monthly report, which we are happy to send you.