Why rent is skyrocketing in the Phoenix Metro Area
Rent in the Metro Phoenix Area is skyrocketing, climbing 80% between 2016 and 2021. Meanwhile, median household income only rose 22% during those 5 years. As a result, many people are using 50 to even 100 percent of their income to pay their rent. Earlier we spoke with Catherine Reagor, Senior Real Estate Reporter at the AZ Republic for more.
Reagor stated that Phoenix “led the nation” in rent increases. There has been more than a 30% increase in the price of apartment rentals last year, and a more than 20% increase in single family rentals last year. All of this is happening even though Phoenix is leading the nation in development.
The answer as to why this is happening is multi faceted. Population growth is one reason why rent is increasing. However, she says that because the rents are rising that population growth could slow. Phoenix also saw a lot of job growth, which enticed more people to move here.
Even though Phoenix rent is increasing abruptly, the metro area still looks affordable to those from the East and West coasts. There is particularly a lot of people from California, Portland, and Seattle.
Right now, a one bedroom average Downtown is $2,800, and a three bedroom is $3,500. A studio in a new high rise could be as much as $1,500. Reagor says that so many epople just cannot afford that.
Last year, there were moratoriums and evictions. But Reagor says the big increases in rent started this year.
More than $13 billion spent buying metro Phoenix apartments, much spent by new landlords, and that does not count new buildings. An apartment downtown would typically be $250,000. However, some are selling for as much as $600,000 per apartment unit.
Some people are spending all of their income on their rent, and Reagor said “it just can’t” go on, people can’t afford it.
Many things block new constructions, such as material shortage, labor shortage, political backlash, etc contributing to this housing shortage. There has been push back in every valley city, developers cannot build for a profit. Negotiation takes so long the deals fall through.