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Renters Rejoice? Prices Slowing Down, But Phoenix Still Top Growth Market
The short-term outlook for the Valley’s apartment market may be more attractive to renters than investors. According to data from Axiometrics, an apartment market-research firm, rents are still rising but not as fast.
Rent growth in the Phoenix market peaked in May 2016. That’s when the average rent jumped more than 8 percent from May 2015.
“It’s a product of demand,” said Nick Fitzpatrick, an analyst with Axiometrics.
He said pent-up demand and job growth led developers to build about 6,800 new apartments in the Phoenix market last year. He expects about 6,500 new units this year, along with slower rent growth.
“Probably around 2.5 to 3 percent,” Fitzpatrick said. “That’s nothing to be alarmed about. When we talk about 2.5 to 3 percent that doesn’t look very good to some people, but you have to take a step back and realize that we’ve seen some exceptional few years in the apartment market, and so when we get back to these 2.5 and 3 percent, it’s in line and actually above average in a lot of markets.”
With Phoenix rents rising faster than the national average and an occupancy rate of 94 percent, he doesn’t see a bubble on the horizon.
“The amount of new supply that’s coming in isn’t really out of the norm for Phoenix during other cycles so I don’t think there’s any fear there that we’re going to see a bubble burst,” he said. “That demand is still there so I think Phoenix is going to be okay.”
According to Axiometrics, the average rent in the Phoenix market was $968 in November 2016 compared with the national average of $1,278.