By Mike Bodeen · 19 February 2018
Is Phoenix entering a rent crisis period? This is an important question which needs to be understood. A recent article in the Arizona Republic indicated that Phoenix is the 9th least affordable city for renters in the country. This was quoting a report from the financial technology company SmartAsset.
We’ve been reporting the rising cost of rentals for a number of years now and these higher rents are what has recently landed us on this top 10 list (per SmartAsset) of U.S. cities where renters have the toughest time stretching their wages to pay rent. The average Valley renter must use more than a week-and-a-half of their monthly pay to afford the typical one-bedroom apartment, according to SmartAsset.
It’s a ranking that puts metro Phoenix in the company of San Jose, San Francisco, Los Angeles, New York and San Diego – and we don’t even get the ocean views to go along with the high prices, says the Republic article.
Interestingly, one of California’s major cities, San Jose, has the worst rental affordability in the country. The average San Jose worker earns an average income of $47,030 per year, but it takes that worker 90 hours per week to afford that rent. To cover the average rent in Phoenix, the worker, by comparison, must work 66 hours per week to afford it. Ouch. For the full article:
http://www.streetscout.com/news/article/phoenix-ranks-9th-most-unaffordable-city-renters-according-study
Our rental issue, which mirrors our shortage of homes for sale, must be dealt with for the long term financial health of our communities. This can happen if builders construct more affordable housing. In the past few years however, luxury rentals have gone up in strong numbers, but not so much in the affordable range. I think more cities need to become creative and come up with affordable rental solutions to assist developers.
The Cromford report has recently offered some observations on our rental market based on the ARMLS database.
new rental listings are being added at a rate which is roughly 15% lower than in 2017.
we have seen 2,838 new listings in 2018 so far, compared with 3,298 in 2017 at the same point
we have 2,431 active rental listings, down from 2,726 in 2017, 2,485 in 2016, 3,712 in 2015, 5,188 in 2014 and 7,339 in 2013
the average asking price for active rentals is $2,021, up from $1,980 in 2017, $1,931 in 2016, $1,709 in 2015 and $1,454 in 2014
the latest monthly average lease rate is 87.2 cents per sq. ft., up from 84.5 cents last year, an annual increase of 3.2%
the average rent agreed is $1,512 per month, up from $1,465 last year, $1,405 in 2016, $1,296 in 2015, $1,251 in 2014 and $1,235 in 2013
the average rent agreed is 99.46% of the rent asked, little changed from 99.50% last year
A new record high rent of $28,000 per month was recorded as signed in January for a 12,547 sq. ft. home on 46th Street in Paradise Valley.
All this to say the problem is trending worse since last year (and last year we knew it was bad). One solution on the individual level, if you are a person who is renting, is to buy now. One of the great things about a typical mortgage is that there is no land lord to raise the rent on you, not to mention you are essentially locking in a monthly price that will hedge you against future inflation. In fact, there are some areas of town where your mortgage will literally be cheaper than your rent…
Market data referenced in this article comes from The Cromford Report.