Arizona Rents Continue to Fall - This Could Hurt Real Estate Investors

Mark Hake

According to a recent national rent survey by Zumper, Arizona rents continue to fall.

All major cities in the Phoenix area had large month-to-month rental decreases during November. However, Tucson area rents rose.

This can be seen in the following table:

https://img.particlenews.com/image.php?url=3IP7nM_0pvN3fJN00
Zumper survey of Arizona cities' rentsPhoto byZumper

It shows that the Glendale area rents fell the most. They were down 3.10% in the last month for 1-bedroom units. In fact, Glendale's average rental price of $1,280 per month is lower than Mesa's $1,280 per month.

Gilbert's rental prices (1-bedroom) fell by 1.80% on a month-to-month basis.

That is followed by both Phoenix and Mesa which both experienced a 1.50% decline in one-bedroom rental prices.

As might be expected, Scottsdale rents declined by 0.60%. However, in the past year, Scottsdale area 1-bedroom rents have declined the most, 8.90%.

However, Tucson area rents are up 2.2% in the last month. They have also declined the least of all major Arizona rents in the last year - down 2.2%.

This Could Hurt Real Estate Investors

Last month rents were down as well, as I described in my article, "Arizona Cities Experience Huge Rent Decreases Except Glendale..."

Many cities are now adjusting to non-Covid conditions. There is no longer a large supply problem relating to lumber and construction materials.

In fact, a recent SOCDS Building Permits Database query shows that total units in Arizona have increased dramatically in the month ending September 2023.

The query report includes all units including single-family residence building permits, multi-family structures, and 2-unit through 5+ unit family structures.

https://img.particlenews.com/image.php?url=1FYNAc_0pvN3fJN00
HUD report on building permits for ArizonaPhoto byHUD

The total unit building permits increased from 4,878 in August to 5,793 in September. That represents an increase of 18.8% in just one month. That is a massive increase and could easily account for the decline in rents.

Moreover, the total units have more than doubled since January when they were at 2,215 for that month.

If this type of construction continues in Arizona the effect on rental prices for investors who are renting their homes could be deleterious.

As long as new rental units are increasing in supply that will lower existing rents for Arizona. This trend could hurt rental investors in Arizona if this keeps occurring.

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Mark R. Hake, CFA, writes articles on national and local news, stocks, and market events at Kiplinger.com, Barchart.com, Medium.com, and Newsbreak.com as well as TalkMarkets.

He is also the Chief Strategy Officer for AnaChart, a new sell-side stock analyst tracking service.





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Mark Hake is a financial analyst, investor, and Chartered Financial Analyst (CFA). He writes about US and foreign stocks and wealth, financial, and economic issues. He previously ran his own hedge fund and investment research firm and is presently Chief Strategy Officer for Foldstar Inc. and AnaChart.com.

Phoenix, AZ
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