The headlines over the last few days have been quite loud about the rent increases we've seen here in the valley. Yesterday, the Cromford Report's Daily Observation read:
"February 23 - The single family rental situation on ARMLS is getting silly. There are now only 2,196 single family active listings where we normally see 4,000 to 5,000. the average rent is $1,922, up from $1,773 last month and $1,598 last year.
It is not much saner with condo rentals. We have 974 active condo rental listings compared with 1,331 last year and the average rent is $1,575 compared with $1,429 last year.
I have never seen so few active rental listings or rental rates this high since we started measuring in 2004."
Even the Arizona Republic got in on the action yesterday also with the article "Phoenix rents rise 5.6 percent in year, top U.S. average". They state, this "was higher than the 3.3-percent average hike in the 35 larger cities studied." The article even went on to say that "rent increases also are exceeding U.S. inflation, which rose 0.8 in 2014".
What's a renter to do? Make sure you explore ALL of your options. What's interesting to note is that the Cromford Report refers to the single family rental market and the Arizona Republic is referring to all rentals. Period. Now what's interesting to me, is that I just got off the phone with a client who has been in search of a rental here since December. She's relocating to the area from just south of the Silicon Valley and is looking for a newer & higher-end condo community in a central location that will be easily accessible to the best amenities in town.
Since we've been working together, we've seen a 20-25% decline in the price of rents at a condo community where she will ultimately lease her home from the when we first considered it last December. Even more interesting is that there are quite a few listings that we saw then still on the market, including the one she originally considered leasing in December. What gives? It's hard to see the whole picture in ARMLS, but I suspect that all of the brand new, luxury apartment communities that developers scrambled to build after first realizing there was a shortage in rental inventory, just all came to market at the same time...
So now, the developers who couldn't all sell their condos are still leasing their unsold inventory and they are competing with the luxury rentals units including those from Optima Sonoran Village (Near Fashion Square in Scottsdale- Camelback & 68th St), the Broadstone communities (Camelback Corridor & Lincoln/Scottsdale Rd.) and even the pretty lofts up on High Street in the Desert Ridge/City North area. What's really interesting to me is that whereas many of these communities choose not to list their units in the MLS, even that is changing and they are now willing to cooperate with other brokers.
This trend I'm seeing is just limited to luxury condos, but I wonder if tenants who have flexibility in their lifestyle start choosing a more urban lifestyle (with the significantly lower price tag) when this eventually start to trickle down to the single-family market too? Food for thought... only time will tell.
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