Metro Phoenix rents keep climbing: What renters struggling in hot market should know
Ask most metro Phoenix renters about their monthly payments now, and you will likely hear a groan.
Despite the pandemic, Valley rents climbed by double-digits during the past year, and the area is leading the nation for rising rents on affordable apartments and homes.
“Renters by necessity” because they typically can’t afford to buy are paying an average 8.4% more for their Phoenix-area rentals than they did a year ago, according to research firm Yardi Matrix’s May research.
California’s Inland Empire ranks No. 2 for the biggest affordable rental increase.
Metro Phoenix rents increased as a record number of tenants fell behind on rents and potential evictions mounted during moratoriums.
At the same time, Valley home prices soared, new rentals were built at a brisk pace, and people kept moving to Arizona for housing that is more affordable than the East and West coasts.
And rents are expected to climb faster in the Phoenix area than any other big U.S. metro this year.
Bad news for renters
Overall metro Phoenix rents jumped between 10% and 14% during the past year, depending on the research.
That lands the Valley on lists of the top three U.S. metros for the biggest rent increases. California's Inland Empire and Sacramento are the other top areas for rent hikes during the pandemic.
Some research shows the Phoenix area will lead the nation for rising rents this year.
Nationally, rents increased only about 3%, partly due to rents falling in New York, Seattle, San Francisco and Washington, D.C., as people left those areas during COVID-19.
The average Phoenix-area renter is paying $1,320 a month, according to Phoenix-based ABI Multifamily.
That compares to the U.S. average rent of about $1,430.
Single-family rentals costs are increasing, too, as more buyers priced out of the market opt to rent a house instead of an apartment.
Metro Phoenix tenants of houses are paying average of $1,881 a month, according to research firm CoreLogic. That’s up 12.2% a year ago and is the biggest increase for any U.S. metro.
About 96% of all Phoenix-area apartments are leased, up slightly from last year, reports ABI.
Valley rental occupancy rates climbed despite more than 10,800 new apartments opened up during the past year as another 31,000 are under construction.
Usually vacancy rates rise with so much new construction, but the Valley is bucking that trend.
Yardi/Matrix is forecasting Phoenix-area rents will climb 6.1% this year, more than any other metro. The Inland Empire and Miami, rank behind the Valley for slightly lower than expected rent hikes in the 5% range.
Tips for renters in hot market
Rent.com managing editor Brian Carberry advises renters to be ready to jump on signing a lease for places in popular neighborhoods.
“Waiting even a few hours might be too much. If you see something is available, be ready to fill out your application ASAP,” he said. “This means having your work history, proof of income, references, money available for first month's' rent, security deposit and other fees, etc.”
Also, he advises renters with low credit scores to have a co-signer or guarantor lined up.
Bring your co-signer (typically a roommate) or guarantor (parent or other family member) with you when looking at an apartment so everything can be taken care of in the moment, he said.
Be ready to pay more or commit to a longer lease.
“In a hot market, you won't have as much negotiating power as a you would in a down market,” Carberry said. “Consider offering a little bit more for your rent payment, as long as it's still within your budget, or offer to sign a lease for a longer-term.
“Also, offer to begin the lease immediately so there are fewer days where the unit is vacant and rent isn't being collected,” he said.
Renters reading this column are probably groaning. Sorry.