As we begin 2016, things are much different in the rental market then they were say back in 2008 when our local real estate market was crashing here in the Phoenix metro area.
Back then, people were short selling their homes, or getting foreclosed on, unfortunately, and being forced to rent a home or an apartment due to credit issues.
The rental market was adjusting back then as well, but rental prices for a single family home were lower than the typical loan payment for the same home.
Fast forward to 2015, and we are seeing very high rental rates plus the average family is now spending over 30% of their monthly income on housing.
This is according to an article posted recently on the Raw Story.
The American Community Survey for 2014, released a few weeks ago, found that the number of renters paying 30% or more of their income on housing – the standard benchmark for what’s considered affordable – reached a new record high of 20.7 million households, up nearly a half-million from the year before. Despite the improving economy, the increase was nearly five times bigger than last year’s gain.
That means about half of all renters live in housing considered unaffordable.
And the latest increase comes on top of substantial growth since 2000 that has seen this number climb by roughly six million households over the period, an increase of about 41%. Read the rest…
As real estate agents in Phoenix, we are seeing rents increase faster than house payments because interest rates still remain so low.
The Phoenix area hit an impasse on new building for a few years until the market crash adjusted back to normal.
A study by the Harvard Joint Center shows that rental rates are surpassing the rate of inflation and that new construction only accounts for about 5 % of new rental housing stock and that a record setting 21.3 million people are facing housing costs burdens and are spending more than 40% of income on housing and utility costs.
The median rents of the new market-rate apartments coming online are out of reach for many households. That median rent hit $1,372 in 2014, a 26% increase from the prior year.
However, roughly 1 in 5 renters earn less than $15,000 annually and would require rents to be less than $400 to afford them.
The report shows that between 2003 and 2013, new construction only contributed 5% to the rental housing stock at those affordable levels, while conversions of single-family homes from owner-occupancy contributed 2%, and downward filtering of higher-cost units contributed 11%. Read more here …
They also brought up a point that housing units with low rents are vulnerable to deterioration.
Maybe it is time for investors and developers to take a long look at building more apartments which typically have lower rents and maintenance costs than single family housing units to slow down this deterioration factor?
Are you moving to the Phoenix, Arizona area?
Ping us, and we will give you the best info on the rental market here so you can make the best choice and get things organized for your move.
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