Arizona rental demand softens as migration trends unfurl

Real Estate | yesterday |

With a spotlight on Arizona, Zumper’s just-released November rent report shows pandemic-era trends are beginning to unwind as Arizona rental demand softens. Zumper has been tracking rental prices and trends across the country since 2014.

Some of this month’s findings that are especially relevant to Arizona audiences include: 

• Median one-bedroom rent across Arizona was $993 in April 2020; two years later, it was up 33.5% to $1,326. 

One-bedroom median in Phoenix is up just 0.7% ($1390) month-over-month, while the two-bedroom median is down 0.6% ($1690).

Chandler, Gilbert and Tucson all saw one-bedroom medians fall this month, and we expect that trend to spread to cities like Scottsdale and Mesa over the next six months.

• As the housing market cools and uncertainty hangs in the air, iBuyers are withdrawing from the market–giving prospective buyers less competition from all-cash offers. But with interest rates continuing to rise, many people are holding off on buying a home for now, which means demand for rentals won’t crater altogether.


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Notable trends: 

1. Recession fears and diminishing occupancy are helping nudge rental prices down across much of the country.

2. Pandemic-era trends are beginning to unwind, especially in areas that previously welcomed large numbers of new residents thanks to work-from-home policies. This reversal is especially evident across Arizona.

3. Boston and San Francisco are now tied for second most expensive city in the country, with New York showing no signs of relinquishing its No. 1 spot.

Arizona’s example: 

Arizona is a perfect illustration of pandemic-era migration trends and how those trends are now beginning to unfurl. 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. Median one-bedroom rent across Arizona was $993 in April 2020; two years later, it was up 33.5% to $1,326.

Another factor driving upArizona rental demand and rent prices: the disproportionately large number of iBuyers flipping Arizona homes over the last few years. Now, as the housing market cools and uncertainty hangs in the air, many iBuyers have cut staff (or shut down altogether)–giving prospective buyers less competition from all-cash offers. With interest rates continuing to rise, many people are holding off on buying a home for now, which means demand for rentals won’t crater altogether.

But the swirl of uncertainty, inflation, high interest rates, and return-to-work policies has softened demand across the state. For example, one-bedroom median rent in Phoenix is up nearly 19% over the same time last year, but those rate hikes are decelerating. One-bedroom median in Phoenix is up just 0.7% month-over-month, while the two-bedroom median is down 0.6%. Chandler, Gilbert, and Tucson saw one-bedroom medians fall this month, and we expect that trend to spread to cities like Scottsdale and Mesa over the next six months.

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