Rental Market Condition in Arizona
By Payam Raouf
In August, residential rental units showing as “Active”, meaning that they are still available, have almost doubled in the valley from around 5,000 to 9,500 on Multiple Listing Services (MLS) and less than 300 show in the “Pending” status, meaning they are under contract. In addition to that, out of the available 200,000 apartment units almost 10,000 rentals are sitting vacant valley wide.
There are thousands of homes in the process of foreclosure where banks are allowing homeowners to live in their own home free of charge for long periods of time and so many others are in the process of re-modifying their loans.
Many first time home buyers have taken advantage of the huge buying incentives and have already moved out of their rentals and into their own homes.
Investors have purchased over 15,000 homes in the past few months and are putting them up for rent as soon as they finish remodeling them.
Apartment managers have been struggling for the past few months competing with investors' single family homes and are offering deals to prospective renter that are unheard of. They are practically taking a breath test and if renters fog the mirror, they will get to move in for free for months with no deposits, pets and all.
Going forward I see a gulch of rentals in the market both in single and multi family units valley wide.
Fortunately for us we have been renting our single family units in less than 15 days! In an effort to stay ahead of the market and rent our inventory quickly, we have signed multiple agreements with major on line rental marketing companies such as Rentals.com, Rentahouses.com, Buyrenter.com and nearly 40 other paid marketing websites.
We recommend if you are renting your house, make it market ready, price it competitively and work with your prospective renters on the terms and conditions.
4 bedrooms in centrally located areas with pool and extra amenities are renting faster and for more. Older units with 3 bedrooms are dime a dozen. You need to get aggressive on those.
In the following article you will learn more about the rental market condition. Please call me direct at 623-776-5774 or e mail me at firstname.lastname@example.org if you have any question.
Deals abound for bargain-hungry renters.
by J. Craig Anderson -
The Arizona Republic
Job losses and an explosion of foreclosure homes on the rental market have caused serious losses for Phoenix-area apartment communities, according to a new study.
Apartment complexes suffered severe declines in both occupancy rates and lease rates during the past year, with the average rent for all types of apartment and townhouse units declining by nearly 6 percent in 2008.
Those numbers don't account for concessions offered to new tenants, which experts say have cut renters' actual costs even more.
The occupancy rate declined by more than 2 percent from the previous year, with more than 2,000 apartments going vacant. Those losses were on top of the nearly 3,000 units vacated in 2007, according to the study by RealFacts, a rental-market analysis firm based in Novato, Calif.
Analysts and apartment-community managers said they don't expect a rebound this year unless layoffs, work furloughs and home foreclosures decrease.
"What drives it down, of course, is supply and demand," said Robert Hicks, Southwest regional vice president of Alliance Residential, a Phoenix-based property-management company. "That's the problem: We've got huge supply and very little demand."
Because it takes years of planning to build an apartment complex, there were units being built as late as 2008 despite declines in occupancy rates and average rent.
Almost 1,900 new apartment or townhome units came online in 2008, while nearly 2,200 new and previously occupied units went vacant, according to the study.
No segment of the rental business has suffered more than high-end apartment communities, according to Caroline Latham, RealFacts' co-founder and chief executive officer.
"It seems today's renter is looking for a bargain," Latham said in a news release. "There aren't enough high-income renters with good credit to commit to premium rents prevalent in high-end markets."
Hicks said bargains are exactly what apartment managers are offering. He has seen deals of up to four months' free rent for a long-term lease.
But it's unclear whether prospective tenants are more likely to respond favorably to upfront discounts or to guarantees that the rent won't go up in a year, he said.
"People want to know what their fixed costs are going to be," he said, adding that some communities are offering leases of unprecedented lengths, up to three years.
Competition for renters is as fierce as it has ever been in the Phoenix area, local experts said. Each month, thousands more foreclosure homes are bought and converted into rental properties.
The cities with the biggest declines in occupancy from June 2008 to June 2009 were Glendale (down 3.9 percent), Phoenix (down 2.7 percent) and Tempe (down 2.1 percent).
Still, Tempe had the highest overall occupancy rate in the Valley as of June and was the only city in which more than 90 percent of apartment and townhouse units were occupied.
The lowest occupancy rate of any Valley municipality covered by the RealFacts study was Peoria, where it was slightly more than 83 percent in June.
Hicks said it has been difficult for managers of the Phoenix area's nearly 200,000 apartment and townhome units to compete with foreclosure-home rentals because, in most cases, property owners simply continue to lower their asking prices until they get a bite.
In contrast, apartment and townhome communities have fixed costs that must be exceeded by rental income to stay in business.
Other challenges include more renters doubling or tripling up in the same house or apartment and recent college graduates staying or moving back into their parents' homes rather than striking out on their own.
The latter trend in particular has hurt management companies that specialize in trendy communities for young professionals, Hicks said.
Job losses and work furloughs also have contributed to the growing apartment-vacancy rate, RealFacts concluded.
Hicks said Sunday's news that the Bashas' grocery-store chain was in bankruptcy and closing 10 locations was just one more reason for apartment managers not to be too optimistic about the near future.
"Those (employees) are the renters of the world," he said