With a focus on Arizona, Zumper’s just released November rental report shows that pandemic-era trends are beginning to ease as Arizona rental demand eases. Since 2014, Zumper has been tracking rental prices and trends across the country.
Some of this month’s results that are particularly relevant to Arizona audiences include:
• The average one bedroom rent across Arizona as of April 2020 was $993; two years later, it rose 33.5% to $1,326.
• The median one-bedroom in Phoenix is up just 0.7% ($1,390) month-to-month, while the median two-bedroom is down 0.6% ($1,690).
• In Chandler, Gilbert, and Tucson, the median one-bedroom home has all fallen this month, and we expect that trend to spread to cities like Scottsdale and Mesa over the next six months.
• As the housing market cools and uncertainty hangs in the air, iBuyers are pulling out of the market – offering prospective buyers less competition from all-cash deals. But as interest rates continue to rise, many people are hesitant to buy their own home for the time being, meaning demand for rental housing won’t collapse completely.
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1. Recession fears and declining occupancy are helping push rents down across much of the country.
2. Pandemic-era trends are beginning to moderate, particularly in areas that previously welcomed large numbers of new residents thanks to work-from-home policies. This reversal is particularly evident throughout Arizona.
3. Boston and San Francisco are now the second most expensive cities in the country, and New York shows no signs of giving up its No. 1 spot.
Arizona is a perfect example of pandemic-era migration trends and how those trends are now beginning to unfold. Almost every city across the state has seen stratospheric price increases during the pandemic, thanks to an influx of new residents seeking warm weather and a better quality of life. The average one-bedroom rent across Arizona as of April 2020 was $993; two years later, it rose 33.5% to $1,326.
Another factor driving Arizona rental demand and rates is the disproportionate number of iBuyers who have sold homes in Arizona in recent years. Now, with the housing market cooling and uncertainty hanging in the air, many iBuyers have cut staff (or closed altogether) — giving potential buyers less competition from all-cash deals. As interest rates continue to rise, many people are reluctant to buy their own home for the time being, meaning demand for rental accommodation will not collapse completely.
But the maelstrom of uncertainty, inflation, high interest rates and return-to-work policies have dampened demand across the state. For example, the average one-room rent in Phoenix is up nearly 19% from the same time last year, but those rate hikes are slowing. The median one-bedroom in Phoenix is up just 0.7% mom, while the median two-bedroom is down 0.6%. Chandler, Gilbert, and Tucson saw declines in one-bedroom medians this month, and we expect that trend to spread to cities like Scottsdale and Mesa over the next six months.