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Old 10-06-2018, 01:45 AM
 
Location: San Antonio
4,468 posts, read 10,083,020 times
Reputation: 4227

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Several reasons.

1. It's a popular apartment resale market. In just the four months I could find data for, 80 complexes were sold to new owners. (Jan-Apr 2018) When a property sells, the new owner usually has a higher debt to retire and rents are raised.

2. Low vacancy, due to demand exceeding supply. This is from our new resident migration, AND from former long term rentals being turned into VRBO/AirBnB rentals. Landlords can rent for half the time of a longterm tenant and make just as much profit with less hassle. New builds aren't keeping up with demand.

3. Very few new builds are aimed at moderate income renters. Due to construction costs, the new builds tend to be luxury apartment offerings.

The are other lesser reasons, this isn't all of the causes. It's a great market to be a landlord, but it sucks for middle and lower income renters.
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Old 10-06-2018, 12:35 PM
 
2,754 posts, read 2,918,750 times
Reputation: 2615
Quote:
Originally Posted by yukon View Post
Several reasons.

1. It's a popular apartment resale market. In just the four months I could find data for, 80 complexes were sold to new owners. (Jan-Apr 2018) When a property sells, the new owner usually has a higher debt to retire and rents are raised.

2. Low vacancy, due to demand exceeding supply. This is from our new resident migration, AND from former long term rentals being turned into VRBO/AirBnB rentals. Landlords can rent for half the time of a longterm tenant and make just as much profit with less hassle. New builds aren't keeping up with demand.

3. Very few new builds are aimed at moderate income renters. Due to construction costs, the new builds tend to be luxury apartment offerings.

The are other lesser reasons, this isn't all of the causes. It's a great market to be a landlord, but it sucks for middle and lower income renters.

Thanks for the analysis. I was thinking that Phoenix' rents aren't even that high compared to other metro areas. Plus we still have a lot of lower rental complexes (I think they are called class C and D?).
Regardless of local circumstances, rising interest rates also means rising rents as part of the rent is equal to an interest. Not saying that rates will go up crazy, but the bottom seems in.
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Old 10-06-2018, 12:42 PM
 
Location: AriZona
5,229 posts, read 4,208,636 times
Reputation: 5484
Quote:
Originally Posted by Potential_Landlord View Post
Thanks for the analysis. I was thinking that Phoenix' rents aren't even that high compared to other metro areas. Plus we still have a lot of lower rental complexes (I think they are called class C and D?).
Regardless of local circumstances, rising interest rates also means rising rents as part of the rent is equal to an interest. Not saying that rates will go up crazy, but the bottom seems in.
Cockroaches... Drugs...
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Old 10-06-2018, 04:20 PM
 
1,626 posts, read 2,466,969 times
Reputation: 3504
Quote:
Originally Posted by Potential_Landlord View Post
Thanks for the analysis. I was thinking that Phoenix' rents aren't even that high compared to other metro areas. Plus we still have a lot of lower rental complexes (I think they are called class C and D?).
Regardless of local circumstances, rising interest rates also means rising rents as part of the rent is equal to an interest. Not saying that rates will go up crazy, but the bottom seems in.
Phoenix rents are high compared to the average household income of the city. That's the real measure. Just saying that Phoenix's rental rates are lower than one might find in Los Angeles, Portland, San Francisco or Denver is meaningless when people in those cities tend to earn significantly more than the average Phoenix resident.
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Old 10-06-2018, 06:29 PM
 
Location: San Antonio
4,468 posts, read 10,083,020 times
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Quite a few of the "lower rental" units sold earlier in the year. The Ranch at Midtown and Maryland Palms come to mind. Smaller old complexes, not upgraded but well maintained. Reasonable rent. They sold back in the spring. At one, the rent has almost doubled (or so I was told) and at the other, leases are not being renewed, which makes me wonder if the investor is wanting to renovate and sell as condos. A lot of the small, private owned 8-12 unit complexes were sold too. Even one of the large Broadstone complexes flipped owners.

My complex has already told us they'll be bringing us "up to market rates" and my estimated increase will be around $100/month. I can, however, get the unit fully renovated if I like for that rental increase. Of course, I don't know how soon after signing the lease that will be and who will move the furniture. I wouldn't sign up without knowing that.

My job has changed, I can work from anywhere now that has decent internet, and my main reason for moving to PHX is no longer a consideration. So I've been checking out more reasonable priced cities. Rents are high here and buying is even tougher, especially if you're looking at prices that will match retirement income. I'm checking out San Antonio next month.

Last edited by yukon; 10-06-2018 at 06:50 PM..
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Old 10-06-2018, 10:54 PM
 
Location: PHX -> ATL
6,019 posts, read 5,887,295 times
Reputation: 6459
Decent one bedrooms are going for about 900/month or above it seems. When you factor in water/sewer/trash/tax, you're looking at close to 1k a month for a one bedroom. Then you have electric, etc.

If you use the traditional 1/3 of net income, then you need to make 3k a month net. Taxes are 20% of gross or so, yes? Without doing any actual math, we are looking at 5k or so gross? You are getting close to 60k a year just to comfortably afford market rent.

Median wage in the metro is $17/hr. That's not anywhere near 25+/hr. How many jobs pay at 60k and above in Phoenix? That seems to be a difficult pay level to achieve here, even for Bachelor's grads that aren't in certain fields.

City of Phoenix defines "workforce housing" rents at 970 or less, https://kjzz.org/content/705897/down...000-month-rent and that 970 is for someone making basically 60k a year.

Rent for my apartment went up $150/month. And my apartment is not worth 1400/month. It just isn't. You can buy at a better deal than that.
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Old 10-07-2018, 03:54 PM
 
42 posts, read 42,253 times
Reputation: 87
Quote:
Originally Posted by yukon View Post
Several reasons.

1. It's a popular apartment resale market. In just the four months I could find data for, 80 complexes were sold to new owners. (Jan-Apr 2018) When a property sells, the new owner usually has a higher debt to retire and rents are raised.

2. Low vacancy, due to demand exceeding supply. This is from our new resident migration, AND from former long term rentals being turned into VRBO/AirBnB rentals. Landlords can rent for half the time of a longterm tenant and make just as much profit with less hassle. New builds aren't keeping up with demand.

3. Very few new builds are aimed at moderate income renters. Due to construction costs, the new builds tend to be luxury apartment offerings.

The are other lesser reasons, this isn't all of the causes. It's a great market to be a landlord, but it sucks for middle and lower income renters.
There is high demand and tight supply
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Old 10-07-2018, 05:38 PM
 
Location: CHI>DEN>MIA>SF
98 posts, read 72,198 times
Reputation: 186
Rent in comparable cities like Denver is WAY higher.
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Old 10-08-2018, 11:07 AM
 
Location: Arizona
3,610 posts, read 1,132,998 times
Reputation: 847
Quote:
Originally Posted by new2colo View Post
Phoenix rents are high compared to the average household income of the city. That's the real measure. Just saying that Phoenix's rental rates are lower than one might find in Los Angeles, Portland, San Francisco or Denver is meaningless when people in those cities tend to earn significantly more than the average Phoenix resident.
Quote:
Originally Posted by Cage_50 View Post
Rent in comparable cities like Denver is WAY higher.
So comparable or not?
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Old 10-08-2018, 11:24 AM
 
3,111 posts, read 2,563,113 times
Reputation: 2959
I just saw an old neighbors condo for rent. 705 SF loft style townhouse in 85021. 800 per month. She paid 22,000 in 2010. Same I paid in 2009. At the time, they developer was leasing identical units to Catholic Services at 450, who was putting Iraqi and Cuban refugees in them. They had sold for 150,000 as late as 2008.
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