After a big bump late in the year, Phoenix joined Las Vegas as the nation’s leader for apartment rent growth in 2018, according to RealPage, Inc. In the last 12 months, apartment rents have climbed 7.4% in Phoenix, matching the increase in Las Vegas.
By comparison, apartment rents rose an average of 3.3% across the nation in 2018.
Despite the fast-rising rents, Phoenix renters are still filling up apartments at healthy rates. Occupancy across the market is 95.4%. Even considering the high growth rate, Phoenix rents are still affordable at an average of $1,075 compared to the national rate of $1,353.
Phoenix had trailed Las Vegas for rent growth throughout most of 2018. But the 1.3% bump in Phoenix rents during the last three months of the year was enough to close the gap. It also ranked as the nation’s largest rent increase during the fourth quarter, a seasonally slow period for housing markets. Nationally, apartment rents fell 0.6% in the fourth quarter, on average.
“Phoenix’s strong fourth quarter is impressive, given that so many new apartments have come to market in recent months,” RealPage chief economist Greg Willet said. “But job production has ramped up at the same time, providing fuel to the market. And so all that new supply moving through initial leasing hasn’t seemed to dampen performance stats at all.”
Just over 8,000 units came online in Phoenix in 2018, making it the ninth-highest market in the nation for new units. Inventory in Phoenix is set to grow an additional 2.6% in 2019 as just more than 9,000 units are scheduled to be completed. Another 2,000 units are under construction and set to complete construction in more than 12 months.
“The appetite to begin construction has once again returned to the Valley of the Sun in 2018 though and will continue through 2019,” Willett said. “The 9,000 units completing in 2019 will mark the largest inventory number dating back to 2001. There is an expectation for performance to cool somewhat in 2019. But based on its current strength, even a considerable cool down will keep Phoenix among the nation’s best-performing markets in 2019.”