Thursday, July 27, 2006

Apartment-Rental Rates In Valley Surge ~ Phoenix, AZ ~ Multi Family

Apartment-Rental Rates In Valley Surge

Ken Alltucker
The Arizona Republic
Jul. 21, 2006 12:00 AM

A new survey shows that the Valley's apartment-rental rates climbed at a faster rate over the past year than rates in all major West Coast cities except San Jose.

The study of large apartments in 29 cities shows that Phoenix-area rents in the second quarter surged 7.4 percent compared with the same period the year before, according to Novato, Calif.-based RealFacts Inc. The average Valley apartment rent was $783.

Despite the rapid increase, Phoenix apartments are relatively cheap compared with the pricey markets of Southern California, the San Francisco Bay area and even Las Vegas.

Strong population growth, rising interest rates and houses priced beyond the reach of many would-be buyers allowed landlords to raise rents without the fear of losing tenants. Also, the conversion craze that turned thousands of rental units into condos and a slowdown in construction of new apartment buildings combined to reduce the supply of units.

The survey showed that the Valley's second-quarter vacancy rate was 5.1 percent, down from 7.5 percent a year ago.

"Our apartment market has so much momentum right now," said Pete TeKampe, a senior investment associate with Marcus & Millichap.

Just two years ago, many Valley apartment owners struggled to keep buildings full as renters aided by low interest rates and a hot housing market bought homes. That forced many landlords to hand out perks such as rent giveaways, gift certificates or moving-expense checks to entice renters into long-term contracts.

Now, apartment owners in desirable locations don't have to resort to such freebies, although rental incentives haven't disappeared entirely.

"We're turning to a more healthy market," said Terry Feinberg, president of the Arizona Multihousing Association. "The rental market has improved because of the increased (price) in starter homes and the cost difference between buying and renting."

TeKampe, who tracks the Valley's apartment market, cautioned that using one vacancy rate for the entire region is not necessarily the most accurate way to assess the Valley's rental market. Neighborhoods such as north Scottsdale fetch average monthly rents of $1,000 while rentals in areas such as Glendale and west Phoenix command less than $600 per month.

The RealFacts report showed that San Jose rents surged 9.1 percent over the past year to $1,414.

Rental rates in Southern California climbed at a rapid pace, too. The average rent in Ventura County increased 7.3 percent to $1,320, while rents in the Inland Empire counties of San Bernardino and Riverside accelerated 5.7 percent to $1,110, the firm said.

Apartment dwellers in the market spanning Los Angeles and Orange counties faced the West's highest rents at an average of $1,510, a 6.8 percent hike over the same period last year.

Laura Boyajian, aka, Laura B. is a valley Real Estate Agent and a multi-family property investor. If you would like a free consultation or to learn more about the Phoenix, AZ market, you can call her directly at 602-400-0008.

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