Current Status of the Phoenix Rental Home Market

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It might appear that the times are changing for investors in the rental housing market as well as individuals renting in those markets. Phoenix is one of those areas where change appears to have started.




The latest statistics for the home market in Phoenix and several other major metropolitan areas, for example Las Vegas and Atlanta, show dropping rental prices. This is partially because of a market inundated by institutional investors. The situation with large investors and small investors is often not the same. At this time, some smaller investors might want to re-consider investing in properties in Phoenix. The same is not necessarily true for those with more capital.
As an example of what is taking place in the Phoenix rental market, one can compare the Memphis market with the Phoenix market. In Memphis, a three-bedroom home provides a 10.4% yearly return on investment. On the other hand, Phoenix generates a 9.7% return.
The price rise in existing homes needs to be factored into this scenario too. In Phoenix, there was a whopping 20.8 surge in the price of existing homes. This was partially driven by the average price for a 30 year fixed mortgage dropping to a very low 3.54%. All of this indicates a continuing recovery in the housing market and perhaps an altered demand for Phoenix rental housing. Phoenix is in the top eight for rising prices for homes in large markets. 





This clearly impacts the Phoenix rental environment as rents for a single-family home rose just 0.3% on-year through March 2013.


One expert says that "The supply of single-family rentals has now caught up to meet demand," Jed Kolko, the Chief Economist at Trulia, claims that. "For those who'd been counting on appreciating rents to justify that investment in homes, in many markets, that's over."
The bottom line here is that choosing which market to invest in and where to invest might be more important than for a long time.
Link of interest: http://news.investors.com/business-inside-real-estate/040413-650533-landlords-buying-rental-homes-find-sunbelt-profitable.htm
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