Wow! Rents are on the rise in the Phoenix area. Home prices are stable or even a bit down. All in all it is a great time to be a home buyer. The interest rates are low. There are down payments on a home may be reduced.
Anyone renewing a lease for a house, condominium or apartment in metro Phoenix likely will be facing a higher monthly payment. Rents are going up.
Home prices are stable if not down a bit in the Valley, but rents are on the rise.
The average rent for a Phoenix-area house or condo is up 5.7 percent from a year ago, according to Arizona State University’s W.P. Carey School of Business. The typical apartment rent is up more than 5 percent, research from RealFacts shows.
Valley home prices are down about 2 percent for the year.
Demand for rentals is stronger in the Phoenix-area now. Of course, that’s pushed up rents.
Fewer people are buying. Some don’t have the credit or down payment to buy. Others want to live in areas where they can’t afford to buy, so renting is their best option. And others don’t want to commit long term to a mortgage or place to live.
In November, leases were signed for 2,742 houses across the Valley, according to the Arizona Regional Multiple Listing Service. That’s almost half the pace of homes sales during the month. A similar ratio between sales and rentals has been trending all year. Post housing crash, — during 2012 and 2013 — leases signed for rentals in the Valley were running at about one-third the pace of home sales each month.
Apartment developers are taking advantage of the shift toward more renters. Almost 8,000 apartments are under construction or were recently completed in metro Phoenix. More are planned.
“It’s much tougher to find a an affordable rental in Phoenix now than a year ago,” said Mike Orr, director of the Center for Real Estate Theory at W. P. Carey School. “Most of the rentals available now are priced above what the typical household can afford.”
The average rent on a two-bedroom Valley apartment is about $900.
The median monthly lease payment on houses and condos rented during November is $1,152, according to ARMLS. That’s about what a homebuyer would pay for $275,000 house with a 10 percent down payment, 30-year mortgage and 4 percent interest rate.
Short-term rental deals signed by people coming to the Valley for Super Bowl XLVIII will skew figures during the first few months of 2015. Look to March to see whether more people are deterred by higher rents and choose to buy a house instead.