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It’s no secret that more and more people are looking to rent as opposed to buying a home.
According to an analysis by Pew Charitable Trusts, 43 million U.S. households in 2016 opted to rent rather than buy homes because of convenience, cost or both.
Scottsdale is No. 1, followed by Overland Park, Kansas; Bismark, North Dakota; Gilbert, Arizona; and Lincoln, Nebraska.
Other Valley cities making the Top 40 are Chandler (No. 6), Peoria (No. 7), Mesa (No. 27), Tempe (No. 30), Glendale (No. 35); and Phoenix (No. 41). Tucson is No. 51.
Mary Ellen Brady, a professor in real estate at Cerritos College, said people should not limit their options when renting to an apartment.
“Maybe a house would be best,” she said. “There are homeowners who have recently been taking advantage of the ADU (Accessory Dwelling Unit) Phenomena. Each renter is unique in regards if one person is looking to rent or a family or a couple, etc.”
She urges prospective renters to determine who is paying for what, such as whether the tenant will be paying for any utilities. Not doing so could leave the renter having to pay above their budget.
“And renters should be sure to get a copy of everything that they sign, on the spot,” Ms. Brady said.
However, renting isn’t always a cheaper or better choice to owning a property. People must consider multiple factors, including an individual’s or family’s financial means and the current state of the local real-estate market.
In addition, rental prices have soared over the years, jumping 2.7% in 2018, according to real-estate company Zillow. With demand for affordable housing exceeding supply, more than 25% of all renters – 11 million people in total – are spending more than 50% of their income on housing.
Like home prices, however, rental rates can vary significantly by region, state or city. And in some places, renting will prove to be more cost-effective and a better overall value than owning.
While the Valley cities in the Top 10 rank high in terms of quality of life, their ranking in rental market and affordability are outside the top 40. That benefits Overland Park, which has top 20 rankings in both categories, putting it above all Valley cities minus Scottsdale.
WalletHub’s study used Zillow estimates that found Valley cities saw a 5.3% rise in median rent in 2015, contributing to a lower affordability ranking.
However, Gilbert outdoes the Valley when it comes to share of newer homes. It’s 10.4% measures as the best in the nation.
East Valley cities of Scottsdale, Gilbert and Chandler have better rental affordability scores than the rest of the Valley, good enough to put those measures in the top 20 in the nation. That metric was determined by dividing median gross rent by median household income in each city.
Maricopa County is one of the fastest-growing counties in the nation, according to recent U.S. Census data. And according to a July report from Apartment List, the Las Vegas and Phoenix metro areas experienced the fastest rent growth over the past year.
Mesa ranks second for fastest rent growth in the nation at 4.4%, with Phoenix-proper coming in at fourth with year-over-year growth of 3.8%.
“Tracking rent growth at the national level is informative and provides valuable context,” Apartment List says. “But housing markets are inherently local, and in contrast to the modest growth of our national rent index, some parts of the country are experiencing much more rapid price increases.
Henderson, Nevada had the nation’s fastest rent growth, with an increase of 5.1% from 2018, more than three times the national rate of 1.6%. Henderson is just outside of Las Vegas, which ranks third at 3.9% growth. Apartment List says the Las Vegas area has seen rapid job growth in recent years, but many of those jobs are in low-paying service and tourism industries, and continued rent hikes could lead to affordability concerns.
Some experts agree that fast growing areas may not always be the best place for renters.
Katrin Anacker, Ph.D., an associate professor at George Mason University, said many fast growing cities have high number of in-moving renters. However, she said in the past few decades the number of constructed affordable units has been low.
“Most developers and builders cater to upper income residents,” she said. “Thus, low-income renters have found themselves in a crunch.”
Ms. Brady said low rents usually attract most renters. But she adds that may come with bad property management and an undesired environment.
“Landlords may offer cheap rent just to get a place rented,” she said.
A professor at the University of Chicago said people should ask a property’s owner or management, “Why did the previous tenant move out?”
“That will help you anticipate potential pitfalls of the apartment or neighbors,” Luis Bettencourt said. “Read the fine print of the lease to understand what your rights and responsibilities are as a tenant, and what may be involved if you need to break your lease.”
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