By Philip Haldiman
By
Philip Haldiman,
Independent Newsmedia
The cost of residential rentals has been on a consistent upswing for a while now, and don’t expect them to slow down in Peoria just yet.
About 80 percent of the country’s largest cities saw annual rent growth last month, with Peoria No. 20 on the list of fastest growing rents in the country, according to Santa Barbara-based Yardi Matrix, a software company focused on commercial real estate industry applications.
In the greater Phoenix area, Peoria’s rent led the way with a 6.7 percent increase in the last year, with an average rent of $986. Tempe is second with a 5.5 percent increase, followed by Phoenix with 4.9 percent and Glendale with 4.6 increases.
Gilbert, Chandler, Tempe and Scottsdale have higher rents than Peoria, but experts say costs will continue to rise.
Spokeswoman Andra Hopulele said rent in Peoria is still affordable despite the increase, which could have to do with the city’s low rental inventory. She said only 224 new units appeared on the market in 2016 in Peoria, while by comparison, Phoenix saw 2,877 new units, Scottsdale had 1,641, Tempe had 1,396, and Chandler had 1,290. Mesa and Glendale also saw fewer deliveries, with 389 and 286 respectively, she said.
“The year-over-year jump might be due in part to the shortage of new deliveries,” she said. “Peoria has seen one of the smallest number of units delivered in 2016.”
There are about 6,400 registered residential property rentals in Peoria, as of Dec. 31, 2016.
Vernon Stevens, West Valley property manager and Realtor for RE/MAX Professionals, said it is crazy how much rentals have gone up in recent years, which he sees an ongoing trend.
He said a lot of people are looking to rent homes in Peoria, but they are having a hard time finding anything, with listings being picked up nearly as quickly as they are placed on the market.
It’s simple supply and demand, he said.
“When we went through the foreclosure days, a lot of those houses became investment properties and then there was competition to get that tenant,” Mr. Stevens said. “But now that the investors have sold and cashed in, there aren’t as many investment properties out there.”
Home flips in 2016 accounted for 5.7 percent of all single family home and condo sales during the year in the U.S., up from 5.5 percent in 2015 to a three-year high but still well below the peak in 2005, when 338,207 single family homes and condos were flipped representing 8.2 percent of all sales, according to ATTOM Data Solutions, a property data company.
Four years ago Maricopa County was leading the nation in flips.
Realtor Jesse Abarca said home flips have obviously cooled since then, and he is starting to see big hedge fund groups sell the thousands of homes they listed between 2010 and 2012.
“They had rehabbed the homes and then rented them for the past five to seven years,” Mr. Abarca said. “Now it seems like they are cashing out.”
Millennials have had a part in the continued increase in the price of rentals, despite more interest in home buying as they start to have families.
About 70 million Millennials are expected to reach peak home buying age in 2024, continuing the demand for rentals for at least seven years, according to a recent report from Yardi Matrix.
Mr. Stevens said he has experienced the buying power of the Millennials in the West Valley.
“The younger generation doesn’t want to buy as much,” he said. “They saw the market crash and their parents go through foreclosures and they’re shy.”
Peoria rental properties
The following are the average rents for studio, one bedroom, and two bedroom apartments in Peoria, and their percent in change, month-over-month and year-over-year.
Studio
Average rent: $817
Change M-O-M: 0%
Change Y-O-Y: 12.7%
One bedroom
Average rent: $875
Change M-O-M: -0.9%
Change Y-O-Y: 4.5%
2 Bedroom
Average rent: $1,028
Change M-O-M: 0.5%
Change Y-O-Y: 5.8%
All rentals
Average rent: $984
Change M-O-M: -0.1%
Change Y-O-Y: 6.7%
Source: Yardi Matrix
Philip Haldiman can be reached at 623-876-3697 or phaldiman@newszap.com.
