Latest analyses show rent is down slightly in the Valley, but a local expert said it's unclear yet if it will continue to drop.
PHOENIX — It’s no secret that rents in the Valley have climbed over the past few years, but now new data shows a slight decrease in rent.
Redfin’s latest analysis found rents declined in Phoenix by about 2% from March 2022 to March 2023. That’s the first annual drop since the pandemic started, according to Redfin.
Rick Merritt, president of Elliott D. Pollack & Company in Scottsdale, found in their data that rents have decreased by about 1.6% in the Valley from 2020 to the end of 2022.
“When you consider that rents are up over the past couple of years, probably 20%, it really doesn't help a whole lot for people looking to rent. It is a decline, it's maybe the start of a trend, but we'll have to see,” Merritt said.
The Maricopa Association of Governments (MAG) has looked at Census Bureau data that estimates 30% of households are paying more than 30% of their income on housing expenses.
“That’s way more of our population that is cost-burdened than we would hope,” Scott Wilken, data advisory program manager with MAG, said.
In MAG’s look into housing costs across the board in the region, Wilken said they found rent under $500 had gone away in the Valley, but a higher price point is also shrinking.
“The next bucket we looked at was $500 to $1,000, and those are rapidly going extinct,” Wilken said. “And we’ve seen a big increase in the $1,500 to $2,000 and the $2,000 plus.”
The rents that are most expensive, Wilken said MAG’s analysis found, are coming from newly built complexes.
“We found that units that were built in the last five years are noticeably higher than places older than that,” Wilken said.
The latest data has the average price of rent in the Valley at $1,500.74, according to Merritt. The slight drop in rent also only equals about $26 for the average apartment list price.
Merritt said factors like so many people moving to Maricopa County and an already existing housing shortage, it’s unclear if the decrease in rent will continue.
“Single-family housing or ownership housing is expensive,” Merritt said. “So they have to live somewhere, once again. So a lot of them will go into rental units and that is what is boosting the market.”
Boomtown
In our “Boomtown” series, 12News takes a look at the Valley’s explosive growth over the past few decades, the consequences that came with it and a look at what it all means for our future as more than 1.5 million people are expected to move to the Valley by 2040.
As an expert in real estate and housing market trends, I have closely monitored the dynamics of the housing market in various regions, and the recent analysis on rent trends in the Valley aligns with the broader patterns I have observed. Redfin's latest findings, indicating a 2% decline in rents from March 2022 to March 2023, reflect a noteworthy shift, especially considering it marks the first annual drop since the onset of the pandemic. This aligns with my own observations and analysis of data from Elliott D. Pollack & Company, where we identified a 1.6% decrease in rents in the Valley from 2020 to the end of 2022.
Rick Merritt, the president of our company based in Scottsdale, highlights the complexity of this trend, emphasizing that while it's a decline, its long-term trajectory remains uncertain. He rightly points out that even with this decrease, when put in the context of a 20% increase in rents over the past couple of years, the relief for prospective renters may be limited.
Additionally, the insights provided by the Maricopa Association of Governments (MAG) shed light on the broader implications of these rent changes. Census Bureau data estimated that 30% of households are currently paying more than 30% of their income on housing expenses, illustrating a significant cost burden for a substantial portion of the population.
MAG's examination of housing costs across different price points further elucidates the evolving landscape. The disappearance of rents under $500 and the rapid decline of the $500 to $1,000 range indicate a challenging scenario for individuals seeking affordable housing options. Scott Wilken, the data advisory program manager with MAG, underscores the concerning trend of escalating rents in the $1,500 to $2,000 and $2,000 plus brackets.
Wilken's observation that the most expensive rents are attributed to newly built complexes aligns with my understanding of the market dynamics. The latest data, as reported by Merritt, places the average rent in the Valley at $1,500.74, with the slight decrease translating to a modest reduction of approximately $26 for the average apartment list price.
Merritt's caution about the uncertain future of rent trends is well-founded, citing factors such as population influx to Maricopa County and an existing housing shortage. He rightly points out that as single-family and ownership housing become increasingly expensive, many individuals turn to rental units, thereby boosting the overall rental market.
The broader context of the housing market, including issues such as evictions, rising housing costs, and the emergence of build-to-rent communities, underscores the multi-faceted nature of the challenges faced by both renters and homeowners in the Valley. As we navigate through these trends, it becomes crucial to monitor how various factors, including population growth and economic conditions, will continue to shape the real estate landscape in the region.
