Mav Realty

Hello!

There was a great article in the AZ Republic on Tuesday – it reiterated the fact that rents are rising in Phoenix.  Here it is, in its entirety: 

Apartment rents expected to rise 5 percent

Noelle Knox
USA Today
May. 30, 2006 07:58 AM

If you're a renter trying to save for a down payment, or you're just trying to move out of your parents' home, it'll likely get harder this year. Rents are rising faster than they have in six years.

Apartment rents are expected to increase 5.3 percent this year - about double last year's increase - the National Association of Realtors says. That's the highest jump since 2000, when the Internet boom created lots of jobs for young adults out of college. In April, rising rents were largely to blame for a sharp jump in consumer inflation.

"This is going to be the highest rental increase year since 2000, and it's going to be a broad-based increase in rents, not just limited to a few markets," said Hessam Nadji, who manages research for Marcus & Millichap, a real estate firm in Northern California.

"Renters are already facing higher energy prices and relatively moderate wage growth," Nadji says. "This is going to really squeeze a lot of households."

No one needs to tell Rosa Shephard. The $1,600 rent she pays for a two-bedroom apartment in Laguna Beach, Calif., will rise by $100 a month this Friday. It's a 6.3 percent increase, and Shephard's salary as an administrative assistant isn't rising as much, so she's trying to find a cheaper place to live.

"I'm trying to find a one-bedroom for $1,200," says Shephard, 53. "It just doesn't exist."

There are four driving forces:


•  Job growth. U.S. businesses have generated 4 million new jobs in the past two years. New hires typically look for rental property.


•  Rising home prices. From 1980 to 2000, the median price of a home was 12 times higher than the annual average rent. By this spring, it was 21 times higher, Nadji said. The median-priced home now costs $223,000, making the American dream a fantasy for more renters, whose competition for apartments then drives up rents. There's little relief in sight in such areas as Phoenix and South Florida, where home prices soared more than 30 percent in the first quarter of this year over the same quarter last year.


•  Condo conversions. When the housing market was at its blazing peak, many investors who owned apartment buildings kicked out tenants and sold the units as condos. One out of three apartment buildings sold last year were converted into condos for sale. That took 191,400 apartments off the market, according to the NAR. In addition, the number of new apartment buildings under construction is down this year.


•  Hurricane Katrina. About half the 100,000 displaced families in the New Orleans area haven't returned. Most of them were renters, says Lawrence Yun, an NAR economist, and "that's putting additional pressure on rental units throughout the country."   end of article

Again, we forecasted this months ago, just based on the simple principle of “Supply and Demand” – people continue to move to the Phoenix Metro area, and oftentimes, they rent before they buy.  With the massive number of condo conversions removing a large number of rental units, the supply is down greatly. 

So, if you are renting, now is the perfect time to look into investing in a home of your own.  Why make your landlord wealthier when you can build equity yourself?  Please contact us to learn what the first step to home ownership is!

If you currently own and have a lot of equity (as MANY Phoenix residents do!) you can always look into diversifying with some investment homes.  Being a landlord is not for everyone, but it affords a great opportunity to build wealth!  Both of us have investment homes, so we can lay out both the pros and cons we’ve experienced personally.

Sharon Kotula, ABR
Adam Tarr, ePRO

Your Phoenix Area Real Estate Source

RE/MAX Excalibur

Scottsdale, AZ

480-483-3333

info@weareazrealestate.com

www.weareazrealestate.com