Tempe and several other Valley cities made the list of a cluster of U.S. suburbs that have evolved from homeowner territory to a renter-centric area.
The list, developed by rentcafe.com, said renters now comprise the majority of homes in Tempe — one of the cities that was homeowner territory 10 years ago, the report said.
The list said 103 total suburbs fit into that category, according to the report.
“The very definition of suburban living has been rewritten throughout the last decade as suburbs in the nation’s 50 largest metros gained 4.7 million people since 2010 — a whopping 79% of whom were renters, according to the latest U.S. Census data,” the report said. “Today, about 21 million people rent a suburban home in the 50 largest U.S. metros — 3.7 million more than 10 years ago. What’s more, between 2010 and 2019, the number of suburban renters grew by 22% — a number that dwarfs the 3% increase in suburban homeowners during the same period.”
But Thomas Brophy, national research director at Colliers in Phoenix, said he thinks the list of renter-centric areas might be bigger than just more than 100 U.S. suburbs.
“I would say that is mainly true of most areas in the United States,” Brophy said.
In the Valley, he said developers started concentrating on multifamily homes such as apartments in about 2012. He said more multifamily homes popped up for residents who lived inside Loop 101 whereas single- family homes were built outside Loop 101 in the suburbs.
Brophy said developers in the Phoenix area started to focus on the infill development of mid- to highrise multifamily homes and the build to rent developers such as Christopher Todd started building on arterial roads outside Loop 101.
He said the low number of available single-family homes might not catch up to supply until the end of 2023 because developers are concentrating on building rental homes.
“Some demand has been pushed into rentership,” Brophy said. “How long does that carry over?”
Brophy has said residents are opting for the experiences of living in different places while typically paying more renting. Developers are including options such as hardwood floors and an in-unit washer and dryer to lure renters.
In September, Brophy said the Valley’s rental 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.
Through the end of September, that number is still hovering around 96%, according to Brophy.
Steven Hensley, housing analyst at Zonda, said many residents are turning to renting because it’s a simpler, more affordable method to secure a place to live.
He said renters don’t need to come up with a down payment for a home that often equals thousands of dollars.
“The market is definitely seeing a push for more rental properties to the suburbs,” Hensley said. “One of the drivers of that is affordability. ... Another part to that is we just don’t have enough supply of homes people can actually own. The rental market is taking advantage of the existing sales supply. Developers are filling a need by offering rental opportunities.”
The report said Census data show most of the renters are millennials and Gen Zers looking for housing options that better suit their budgets, as 55% of suburban renters are younger than 45 with median household earnings around $50,000.
Hensley said rental properties are desirable to a lot of demographics that include retirees, young families and single people.
He said rental homes will continue in popularity until enough single family homes Re build to level out the supply.
“(Rental properties will be popular) for the foreseeable future. ...People need places to live.”