SCOTTSDALE, Ariz. — Several cities in Arizona are among the top places in the country where rents are rising the fastest.
A report by Apartment List found six Arizona cities, all in the Valley, have had rents increase by more than 25% over the past year alone.
Rising rents in Arizona
Nicole Terrell, who's a realtor and a renter in the Valley, has seen the rent on the home she's leasing increase by about $600 per month.
"We’re starting our new lease and it is just right at almost $3,000," Terrell said.
Limited available options, along with higher costs for the deposits needed to move into a new place, are just some of the changes she's seen in the market for her, Terrell's friends, and her clients.
"Hard to get in and they’ve definitely increased to silliness," Terrell said. "Because you’re not getting anything for your money."
In Apartment List's report, Scottsdale came in only behind New York City and Tampa, Fla. as the nation's top cities for rent increases. Scottsdale saw rents rise by 31.1% from January 2021 to January 2022.
Mesa, Phoenix, Glendale, Chandler and Gilbert were also listed in the top 20 cities with the fastest-growing rent in the country, as part of Apartment List's report.
"Rent prices have just been skyrocketing pretty much across the country," Rob Warnock, a senior research associate with Apartment List said.
More demand and less supply
Warnock said he and his colleagues found 2021 had higher increases in rent than pre-pandemic levels.
"We've seen rent prices go upwards of 20, sometimes 30 percent, just in the past year," Warnock said.
Increases were particularly noted in the nation's Sun Belt, Warnock said. Places like Florida, Texas, and Arizona are places where people want to live that have benefits like lower costs of living and better weather.
"The things that made Arizona attractive as a place to live, all became extra important during kind of the pandemic period," Warnock added.
Warnock said among the apartments listed on Apartment List in the city of Phoenix, vacancy rates bottomed out at just over 3% in June 2021. Vacancy rates have come up some since then.
"Year-over-year numbers, far fewer vacancies today than there were a year ago. And so that's why we think that 2022 - we're not going to see a reversal. Hopefully, we're just going to see price growth slowed down a little bit," Warnock said.
With vacancy rates so low, Danny Court, principal and senior economist with Elliot D. Pollack & Company, said more housing is needed.
"Even in the face of that incredible demand, we're not able to build those units," Court said. "Even if we wanted to, there's just a capacity limit to how many units we're able to deliver each year."
Court said developers are facing issues like lengthy processing times with municipalities, trouble finding land zoned for housing, supply chain disruptions, and labor shortages.
"We're seeing a shortage of all types of housing: ownership, renter - across the spectrum. So that's from luxury housing, market-rate housing, workforce housing and in that subsidized category of low or very low-income housing," Court said. "That needs public investment to be able to make those work."
Lease up this year?
Both Court and Warnock are expecting rents to continue to go up, but just not as steep as was seen in 2021.
"They need to be prepared for that thing they don't want to hear," Warnock said. "Which is that rent's going to go up."
Court noted that the rise in rent is still "really high" for what Arizona normally sees.
"Baseline rent is so high right now that the expectations for this year is anywhere between seven and 10 percent," Court said.
Knowing many people will have leases expire this year, Warnock and Court said to look at the options available and choose carefully.
"You need to secure that next place of residence before you consider jumping from or balking at that new lease rate," Court said. "It's just going to be tough for quite some time."
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