Large rent increases squeeze Metro Phoenix tenants

0

The Phoenix metro area is facing the worst housing shortage in its history. Rents soared nearly 30% in the Phoenix area last year, more than double the increase in the United States. (Photo illustration by Brandon Griggs on Unsplash)

PHOENIX (AP) — Kathleen Black is facing a 50% increase in rent for the former central three-bedroom Scottsdale apartment she shares with her four children and father.

“My apartment management is raising my rent by $800 a month,” said Black, who moved from Goodyear to Scottsdale in 2020 after a divorce so her children could go to school with their cousins.

“It will take almost 100% of my income, and my dad is on a fixed income,” she said. “Our apartment is not very nice.”

Metro Phoenix tenants have faced some of the largest rent increases in the United States in 2021. But 2022 is proving to be an even worse year as a growing number of landlords raise rents by more than double the increases from last year.

Many tenants in the Phoenix area cannot afford the rent increases and are worried that they won’t find another place to live.

Some tenants have to downsize and share rooms with children or their parents. Others are considering leaving Metro Phoenix for a more affordable location.

Rents soared nearly 30% in the Phoenix area last year, more than double the increase in the United States.

Early projections predict that rents will increase by almost another 20% in 2022.

But this year’s increases for renters could be even higher due to the very low 3% vacancy rate for Metro Phoenix apartments, the area’s growing population increasing competition, big investors paying record rental prices and 50% rent increases during recent lease renewals. .

A normal vacancy rate for Phoenix area apartments is around 6%, which means the percentage of rentals is empty. Today, less than half of the apartments usually available to tenants are vacant.

New apartments are being built in Metro Phoenix, which should alleviate some of the extreme housing shortage. But most new rental homes are high-end and won’t help people earning the area’s median income or lower.

The disparity between incomes and rents was a problem before last year’s big jump.

Metro Phoenix rents have soared nearly 80% between 2016 and 2021, according to real estate brokerage firm Colliers. The region’s median household income rose just 22% over the five years, according to the Federal Reserve.

“Valley rents are among the fastest growing in the country, and wages aren’t growing that fast,” said Mark Stapp, growth expert and director of the master’s program in real estate development at Arizona State University. “We have a problem.”

Black’s monthly apartment payment soared to $2,430, nearly 100% of his monthly income.

She works full time for Tuft & Needle. She loves her job but knows she can’t get a raise to cover her rent increase.

Black and his family are in one of Scottsdale’s most affordable resorts, and demand is growing the fastest for these rentals.

The median rent in Scottsdale is around $2,000, up 29% from a year ago, according to housing data from the Maricopa Association of Government. The median includes all apartment sizes.

“I would stay in the West Valley again, but the apartments there cost as much as the one we’re in,” she said. “I can’t believe the rent is so expensive. I don’t know what we’re going to do.

Metro Phoenix is ​​facing the worst housing shortage in its history.

Tenants are now competing with 20 others for vacant apartments, and the typical rental is only empty for 25 days, according to RentCafe.

According to the Arizona Department of Housing, another 270,000, mostly affordable, units are needed across the state. The demand for most of these homes comes from people living in the metropolitan area.

A home is considered affordable to renters if they pay 30% or less of their income for their monthly payment and utilities.

“Anyone paying more than 40 to 50 percent of their income is heavily burdened with costs,” said Cindy Stotler, deputy director of the Arizona Department of Housing. “Any big unexpected bill, like a car repair, can cost someone their house.”

Arizona retirees on fixed incomes typically make about $16,000 a year, which means they can afford rent of $415 a month, according to the National Housing Agency.

Workers in the minimum wage service industry earn about $27,000 a year. They can afford rent of $690.

Single parents with two children earn an average of $56,000 a year, which means they can pay $1,420 a month in rent.

A family of four with a median household income in the metropolitan area of ​​about $80,000 can afford rent of $1,975 per month.

The median rent for a one-bedroom apartment in the Phoenix metro area hit $1,221 in February, according to national researcher ApartmentList. The typical rent for a two bedroom is around $1,500.

Share.

About Author

Comments are closed.