Phoenix is solidifying its position as one of the top markets in the country for home price appreciation and apartment rent growth, while other primary markets lose steam.
Home prices in Phoenix rose 6% year-over-year in April, the second-highest increase among all major metro areas in the United States, according to the S&P Case-Schiller Index. Only Las Vegas posted stronger growth, rising 7% over the same time. The national growth was 3.5%.
Tight single-family supply and strong demand for housing are driving up home prices and multifamily rents in Phoenix. Despite growing demand for housing, single-family development remains significantly below prerecession levels and developers are attempting to meet pent-up demand from 2009 to 2011, when housing construction came to a near stand-still.
Rising home values have forced potential home buyers to renting. Growing multifamily demand has benefited landlords, giving them additional leverage to drive up rental rates.
Phoenix ranks first among the 20 largest multifamily markets in the country for rent growth, according to CoStar’s preliminary second quarter data. Multifamily rents climbed 7.5% over the past 12 months, ending in June, far outpacing U.S. growth of 2.8%. Phoenix also achieved the highest rent growth by a wide margin; the second-highest rent growth was in Atlanta, rising 4.2% over the same period.
An optimistic outlook, underpinned by strong rent growth and a conservative construction pipeline, will support continued rent growth through 2019.
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