Metro Phoenix rental occupancy hits highest mark in 40 years

Posted

The Phoenix metro is at its highest occupancy percentage in more than 40 years, despite increasing rents around the region, according to a local housing research expert. Thomas Brophy, national research director at Colliers in Phoenix, said the current occupancy rate is 97.1% — the highest since that number topped out at 96.8% in 1978, just before a construction boom in the early 1980s, he said.

“We are literally at the highest occupancy we’ve ever clocked,” Brophy said.

Since 2016, Brophy said multifamily developers have feverishly added 36,000 multifamily units — which includes leased properties and build-to-rent homes — to the Phoenix area. In that time, the occupancy percentage has increased by 230 basis points, he said.

By the end of 2021, Brophy said he estimates Valley developers will add another 11,000 multifamily units — the highest output since 2009, he said.

In 2009, 9,315 units were added to the area.

The housing research expert said developers weren’t prepared for a recent surge in people moving to the Valley and enough homes weren’t added in the past decade to accommodate massive population growth.

From 2010 to 2014, a meager 6,000 units were added to the region, he said.

“For a metro of this size, that’s basically nothing,” Brophy said.

He said not developing enough, coupled with a shift to a more renter-centric market were factors in how the current Phoenix market evolved to its current state.

From 2010 to 2020, there was a 6% increase in the amount of renter households in the Valley — something experts didn’t foresee.

“We weren’t anticipating them moving over,” Brophy said.

The increase in renters along with a lack of places to rent have seen an increase in living costs.

According to a Colliers Research Report, the yearover- year rent growth rate rose to 15% — to $1,413 — during the second quarter compared with the same quarter last year.

“This growth rate is nearly four times higher than the National average which increased 4.4%, but still $85 below the National average rent of $1,498,” the report said.

The report said second- quarter 2021 marks the 12th consecutive quarter occupancy has “been above the five-Year moving average of 95.3%, and 38th consecutive quarter above the 20-year moving average of 91.6%,” the report said.

“Since 2015, over-thequarter rent growth has averaged 2.1% for Greater Phoenix as a whole,” according to the report.

There remains a question of how evictions may play into the vacancy rate as a federal moratorium prompted by the coronavirus pandemic expired last month.

Earlier this month, the Associated Press reported “preliminary figures show that eviction filings in Arizona’s largest county were trending down in August before the Supreme Court issued a decision that ended a coronavirus era moratorium on lockouts” in most of the country.

The report said numbers from the Maricopa County Justice Courts show there were 2,989 eviction cases filed in August, a decrease from the 3,623 cases filed in July.

“Although the August case numbers were up from the same month last year, when 2,168 cases were filed, they were less than half the 6,243 cases filed in August 2019,” according to the report.

However, Mike Branham, presiding constable for Maricopa County, said a few of the Valley’s 26 precincts can see 20 to 30 evictions per day — back to pre-pandemic levels.

He said at one time, experts predicted a “tsunami” of eviction cases coming in the future.

“That made me smile because that didn’t happen,” Branham said.

Last month, the Associated Press reported the Supreme Court’s conservative majority blocked the Biden Administration from enforcing a temporary ban placed on the evictions of people who said they had failed to pay their rent for reasons related to the coronavirus pandemic, the report said.

Branham said there “were extra steps” added to the court process if someone couldn’t pay rent because they had COVID-19 or happened to lose their job.

“It was done to make sure we didn’t make the pandemic worse,” Branham said.

Despite the number of evictions, he said officials try to help renters work on solutions to get their bills paid. Some landlords have helped renters get enrolled in state and federal programs or get on payment plans.

“It’s done some nice work binding us all together,” he said.

Comments

No comments on this item Please log in to comment by clicking here