Rent prices have been soaring, especially in popular cities like Tempe, Arizona. According to Bloomberg, the average rent for a one-bedroom in Tempe was $1,703 in June, a 48.3% increase from 2021. Renting can provide flexibility, but it may not always be the cheapest option. Here is what you should know about the current renter’s market.

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Costs Remain Steep

Both rental and buyers’ markets have shown signs of cooling off in the last few months. According to Zillow, the asking rent growth streak fell 0.1% month-over-month marking the first monthly decline in two years. However, prices are still high at 9.6% above levels in 2021.

In the Valley, the average rent for a one-bedroom apartment has decreased by 9% month-over-month. However, the housing market remains slightly hot, and renting is a common option for those looking to settle in the Phoenix area. Therefore, the downturn is not expected to last long as Arizona is a popular destination for snowbirds and the attractive migration spot could experience an inventory reduction over the winter.

Affordability in Phoenix Metro Cities

Maricopa County has seen high rental prices over the last year. According to Zillow, the median price for a one-bedroom apartment in Scottsdale is more than $1,800, which is 12% higher than national numbers. Here’s how that compares to the midpoint in other Valley cities:

Avondale: $1,424, 15% below national median

Chandler: $1,615, 3% below national median

Gilbert: $1,685, 0.89% below national median

Glendale: $1,345, 19% below national median

Mesa: $1,350, 19% below national median

Phoenix: $1,395, 16% below national median

Tempe: $1,431, 14% below national median

Benefits of Investing in a home

Renting property may appear cheaper in the short run, but overall, investing in a home may be better financially. While rent prices are often lower than mortgage payments, they are subject to change. In many cases, rent can be adjusted by landlords at any time whereas mortgage prices are locked in by the interest rate at the time of receiving a home loan, and can be refinanced to even lower rates later.

Homeownership also brings a sense of stability that renting doesn’t offer. You can personalize the home to your liking, and you do not have to answer to a landlord. Investing in a home also helps build equity and brings tangible perks such as possible tax benefits.

Working with a trusted real estate broker for guidance can ensure that you are making an educated decision on what is best for you.

 

Author: Rich La Rue is the Designated Broker for HomeSmart Phoenix, the flagship brokerage operation in the HomeSmart system. For more information, visit www.richlarue.com.