PHOENIX – With housing prices rising, housing stocks remaining low and more people moving to the valley, housing officials say Arizona needs more than 200,000 apartments.
ABC15 learns that the Arizona Department of Housing estimates the state will need 250,000 additional homes and apartments to meet current demand.
Lack of housing supply can cause all kinds of problems, including the huge price spikes we’ve seen in recent times.
HOUSING COMMUNITIES FOR RENT
With this lack of supply, a new trend is emerging in Arizona in the form of rental construction properties. They are exactly as they sound – single family homes designed to be built to rent, not to own.
“This is actually a fairly new form of residential real estate that didn’t exist five or six years ago,” said Randy Grudzinski of Empire Development Group.
Grudzinski describes the houses as tiny cottages that can have one to three bedrooms with smart features, usually a small backyard, modern updates, with amenities like swimming pools, fitness centers, and more.
“Probably the most popular form of rental right now,” he said.
According to Land Advisors Organization, a large Phoenix real estate broker, there are 52 active construction communities for rent in the Valley with 165 potential or planned locations to come.
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A representative of the company told ABC15 that most of these projects are considered “horizontal apartments” because the units have four walls for you all to yourself, with rental rates “comparable to traditional apartments”.
These new units can be found around the Valley, including off Olive just past 51st Avenue.
The Village at Olive Marketplace will have 204 units on 18 acres – some units are complete, with 45% of them already rented in September.
“We are very happy with the speed with which the houses are rented and to see individuals and families move in,” said Shelby Duplessis, president of land development for Empire Group. “It’s a tribute to the thought we have taken to our selection of locations, our design and the quality of our construction.
Villages range from about 700 square feet to nearly 1,300 square feet, with prices ranging from $ 1,500 for a one-bedroom to $ 2,400 for a three-bedroom.
Most of the communities already completed or under construction are in the West Valley.
The concept of building for rent is becoming popular among millennials and empty nesters, as Grudzinski said they can replace starter homes.
“The idea of buying a house, that starting house that we all know, has become so inaccessible to the average young couple starting out there or even to the singles of that group,” Grudzinski said.
PUSHING FOR OWNERS, NOT TENANTS
However, homeownership advocates like Patricia Garcia Duarte with the nonprofit Trellis say there must be more landlords, not renters, in Arizona.
Garcia Duarte says the call for more homeownership would help low to middle income families by building wealth.
“I think we need to pause and think, do we really want a nation of tenants or do we want a nation of landlords who can build wealth over time,” Garcia Duarte said.
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Trellis has been tracking the prices of rents and homes and is concerned about their level for Arizona families. Garcia Duarte referred to a recent report from Redfin which found that in the second quarter in Phoenix, nearly one in four homes had been bought by investors.
“It creates this chain of movements, of movements of people that the residents have made [into] communities for so many years are under threat, ”she said.
RENTAL COTS ACROSS THE VALLEY
A report released last summer by ApartmentList.com states that “Phoenix rents rose 3.7% over the past month and are up 20% sharply from the same period last year. “
ABC15 looked at average rental prices in the Valley and, according to Rent Cafe, the average apartment size in Phoenix is just over 800 square feet.
Take a look at the average rental prices, according to Rent Cafe, across the valley:
- Tucson: $ 1,115
- Mesa: $ 1,383
- Phoenix: $ 1,408
- Buckeye: $ 1,539
- Peoria: $ 1,559
- Chandler: $ 1,739
- Temp: $ 1,750
- Scottsdale: $ 1,914
Susan Richards, a part-time writer, is at a stalemate when it comes to home hunting because the down payment required is too high.
Richards has an apartment lease that will expire in three months, but she doesn’t want to continue living in an apartment.
“There are a lot of people who are like me, bad luck. I don’t know which direction you’re going, ”Richards said.
Regarding these construction-to-rental trends, Land Advisors Organizations tells ABC15 that there are approximately 550 communities across the country with the highest concentration in Arizona, Ohio and Texas.
Mark Stapp, professor of real estate at Arizona State University, says there really is no downside to the rental construction model because it adds diversity to the housing inventory.
“The offer is tight, it is difficult to add new units; we need so many products under construction, that’s going to ease the pressure on this constantly moving upward and shifting price angle from rental and selling prices, ”Stapp said.