Arizona Rents Much Higher Than A Year Ago, But Report Shows Continued Signs Of Cooling

Rent prices have been moving lower across the nation, and Arizona provides an ideal case study of the trend, according to a new report from apartment-tracking website Zumper.

“Arizona is a perfect illustration of pandemic-era migration trends and how those trends are now beginning to unfurl,” Zumper wrote in its November National Rent Report. “Nearly every city across the state saw stratospheric price increases throughout the pandemic, thanks to an influx of new residents seeking warm weather and better quality of life.”

The report found that median rent for a one-bedroom apartment in Phoenix is up nearly 19% over this time last year, but the rate of rent growth is decelerating, rising just 0.7% month over month. Elsewhere in the Valley — in Chandler and Gilbert — rental rates for one-bedroom units have dipped slightly, as has Phoenix’s two-bedroom median, which is down 0.6%.

Phoenix’s one-bedroom median rent was just over $1,350, making it the 42nd highest rental market in Zumper’s US report. That was lower than No. 14 Scottsdale ($1,900), No. 25 Chandler ($1,590) and No. 26 Gilbert ($1,570), but higher than No. 44 Mesa ($1,380), No. 47 Glendale ($1,350). Elsewhere in Arizona, Tucson was No. 85, with median one-bedroom rent of $940.

In Scottsdale, a two-bedroom unit is going for $2,500, according to the report, which is down 6.4% since last year. Gilbert saw the same percentage dip for two-bedroom apartments. But in Mesa, two-bedrooms are 20.3% higher than a year ago and in Phoenix they are 15% higher.

Return-to-work policies soften demand

The report pointed to factors such as inflation and return-to-work policies as having a softening effect on demand in the state. Nationally, recession fears are also affecting the market.

The cooling housing market is also playing a role in Arizona. The report said rent prices in the past few years were being pushed up in part by the fact that ibuyers in Arizona were busy flipping houses in the state. But the brakes have been slammed hard on that these days. That helps prospective homebuyers, but there are fewer of those right now thanks to rising mortgage interest rates and inflation — meaning the rental market still has some strength.

Nationally, the report said, changes brought on by the Covid-19 pandemic are starting to reverse in many places.

“We’re seeing pandemic trends begin to unwind, and unwind quickly, as renters hunker down in anticipation of a recession,” Zumper CEO Anthemos Georgiades said in the report. “Over the last two years we saw unprecedented rises in rent prices driven by a booming economy, low interest rates, a one-off spike in demand post vaccines, and supply chain issues that delayed new units coming to market. Now — with inflation and interest rates high and the labor market beginning to tighten — Americans are holding off on major economic decisions. Household formation has paused and even inverted, driving demand down and cooling off rent prices.”

Zumper’s report uses rental data from active listings across the country, aggregating them to calculate median rents in the nation’s 100 most populous cities.

The most expensive rents in the nation are in New York City, where the one-bedroom median is $3,790, which is actually down 1.8% month over month. Boston and San Francisco were tied for second, both with $3,000 rates.

By Jeff Gifford – Used with Permission