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Investor Insight for the Phoenix-Mesa-Scottsdale, AZ Apartment Market

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phoenix 198485 640Modern apartments provide attractive housing options for Phoenix-area residents. With a wide variety of accommodations in Arizona, people can locate nice apartments that are for rent. Investors may review some insightful details prior to searching for an apartment to buy in the Phoenix area.

Living in Phoenix-Mesa-Scottsdale, Arizona

Phoenix is one of the hottest areas in the United States. In addition to having above average temperatures, Phoenix has a red-hot rental market. 

Approximately 16 million tourists visit Phoenix each year. The area has a lot to offer, such as the Phoenix Zoo, the Arizona Science Center, Odysea Aquarium, restaurants, sporting events and many cultural activities.

Within a few hours, residents can reach Las Vegas, California or Mexico. Also, many resorts, casinos, bars and comedy clubs are nearby for additional entertainment. 

About Apartment Rental Rates in Phoenix

After enduring a major slump that was created amid the financial crisis, local rental rates have strongly rebounded.

According to RealPage, Phoenix leads the 50 largest markets in annual rent growth. For the past six years, Phoenix has exceeded the typical rent increases in the U.S. by 290 basis points. As of January 2021, the annual rent growth reached 7.7 percent. This represents about a 49 percent rent increase over the past 10 years.

Throughout the U.S., rental rates exceeded 1.3 percent for the month of April. However, the rent increase in Phoenix was 2.6 percent in April of 2021. This led the nation for the largest monthly rent increase during the past decade.

Statistical Data for Phoenix, AZ

The Census Bureau reported that Phoenix had an estimated population of 1,680,992 on July 1, 2019. The population increased 16.2 percent from April 1, 2010, when the population was 1,445,632.

Median household income in Phoenix, AZ was $57,459 in 2019. 

According to the U.S. Bureau of Labor Statistics, Phoenix-Mesa-Scottsdale, AZ market has an unemployment rate of 6.1 percent as of March 2021.

The Phoenix-Mesa-Chandler area encompasses Maricopa and Pinal counties, which represents 68 percent of Arizona’s population. This ranks the region as the 10th most populous Metropolitan Statistical Area in the United States.

Multifamily Property Data for Phoenix-Mesa-Scottsdale, AZ

Prior to the Covid-19 pandemic, the Phoenix- Mesa-Scottsdale area had explosive growth. For 2019, multifamily sales volumes topped $8.2 billion in Phoenix.

Rental vacancy rates were 6.6 percent for the third quarter of 2020, while vacancy rates for the same quarter that were reported one year earlier were 5.3 percent, according to the Commercial Metro Market Report from the National Association of Realtors.

At 6.6 percent, the apartment vacancy rate for the area was above the third quarter national rate of 5.7 percent.  

According to NorthMarq, the cap rate for multifamily properties in Phoenix stood at 4.9 percent in the third quarter of 2020.

The estimate of average gross rent for multifamily properties in the Phoenix-Mesa-Scottsdale area was $1,225 in the third quarter of 2020. Rent was estimated at $1,199 in the third quarter of 2019.

With excellent demographics, ongoing population increases and robust employment figures, the Phoenix area is an excellent location to buy multifamily properties.

Outlook for the Metro Phoenix Apartment Market      

In the fourth quarter of 2020, a Phoenix Market Report from Marcus & Millichap describes post-pandemic growth that is attracting local and out-of-state investors.

In 2019, Phoenix had the highest number of net in-migrations in the country. With more than 77,000 new residents moving into the area, investors have taken notice of the opportunities. 

More than 3,700 apartments are currently being built in urban areas of Phoenix.

Looking ahead, multifamily housing will be important for the Phoenix apartment market, as nearly 1.8 million new residents are expected to move into the area during the next two decades. The demand will require more than 600,000 multifamily and single-family properties to meet the future housing needs.  

Applying for an Apartment Loan in the Phoenix-Mesa-Scottsdale Market Area

Competition among apartment investors is fierce in the Phoenix area. 

When the financials, such as growing employment opportunities, favorable cap rates and an increasing population are moving in a positive direction, investors should have money available to finance the purchase of an apartment building.

Applying for an apartment loan before the funds are needed is a prudent idea for a wise investor.

Direct Apartment Lenders can provide fast funding support for income-producing properties in the Phoenix-Mesa-Scottsdale market area. 

Having an approval to shop for a commercial apartment building will give real estate agents more confidence when approaching a seller to land a sales agreement.

Generally, we can fund an apartment loan within a few weeks, if a property has a debt-service coverage ratio that is in-line with our underwriting standards.

Investors can get a quote for an apartment loan online via our website.

The initial process is seamless, and one of our licensed loan officers will follow up to discuss the loan decision.   

We finance apartment loans nationwide without the need for tax returns or bank statements.  

Investors are encouraged to apply for our stated income apartment loan program.

Contact us today to apply for an apartment loan in Phoenix or in other areas of the country.

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