It has been more than a year since the World Health Organization announced the global COVID-19 pandemic. We can say that the pandemic caused economic contraction to majority of economies here and abroad. However, while some industries and countries still continue to struggle at this time, it seems that the real estate industry in the USA has experienced continuous sustained growth even in the face of pandemic.
One of the cities that have seen growth in residential and rental property market is Phoenix, AZ. In fact, the National Association of Realtors (NAR) considers the Phoenix-Mesa-Chandler, AZ Metropolitan Statistical area as one of the top ten markets during and post-COVID-19. Using various indicators, NAR identified these ten areas to have shown resilience during the pandemic and are purported to better recover and grow post-pandemic.
The growth in the real property market in Phoenix Metro, or the Valley as locals call it, can be attributed to various elements. An important factor is the increase in population brought about by people moving here from other places, with twenty five percent of the movers relocating to Phoenix. According to the Maricopa Association of Government (MAG), a person moves to the Phoenix Metro every two minutes and it turns out that one out of four new Valley neighbors comes from California. Also, as Executive Director Joan Serviss of the Arizona Housing Coalition said southwestern states, like Arizona, experience more migration.
The pandemic already created a low inventory of properties for sale nationwide because of reasons such as sellers having reservations about letting potential buyers into their home due to COVID-19. However, aside from the low supply of properties available in the market, the increase in population in the city, with people scrambling to buy houses because of the interest rates being at record lows, creates a demand that drives up not only the median prices of properties but also the rent in renter-occupied households.
According to Zumper, the median rent for Phoenix, AZ increased by 6% to 16% in the past year. Both the 1-bedroom and 2-bedroom units have seen median rents raised by 6% to $1,050 and $1,325 respectively. However, with median rent at $2,169, 4-bedroom properties charged 14% higher on the average from last year. Those looking to rent studio-type units have to pay 15% extra from last year’s median rent to $932 this year while renters looking to rent 3-bedroom houses at a median rent of $1,900 will see the highest increase of 16% from last year’s median rent.
With the Urban Institute reporting that renter growth is expected to grow twice as fast as homeowners growth from 2020 to 2040 , it is no wonder that investors are considering the rental market as good investment nowadays. In Phoenix Metro, tens of thousands of apartments are being constructed now and more are being planned to be built. Also, big firms are buying or refinancing their existing rental properties to further improve its value. Regardless of the possible effects of these events to the supply of housing in the area, analysts still believe that rent will continue to climb in Metro Phoenix this 2021.
