The Phoenix metropolitan area, home to Arizona State University and a wealth of high-tech and telecommunications companies, is highly regarded as one of the best cities in the Southwest in which to live, work and play. With its exceptionally warm winter that is popular with snowbirds and some of the finest golf courses in the country, it's no surprise that Phoenix continues to have an active rental real estate market. Thanks to its strong business climate, Phoenix placed on the National Federation of Independent Business' 2014 list of cities friendly to small businesses. You'll also find Phoenix on Forbes' list of the happiest cities for young professionals.
Q2 2015 Phoenix Rental Market Update
In Q2 2015, Phoenix was the second-best rental market in the Southwestern U.S. and 14th-best in the country as a whole. Since Q1 2015, Phoenix retained its second-place spot in the Rental Ranking Report's regional rankings for the Southwestern U.S. but jumped three spots in the national rankings.
It's hard to find fault in the Phoenix rental market from the perspective of a rental property owner. All the real estate statistics used to gauge housing demand - from vacancy rates to annual job growth to median age of housing inventory - indicate that demand for Phoenix housing is well above average. Annual rental price appreciation, always important for rental property owners to consider, was an impressive 5.98 percent (around 20 percent higher than the national average) in Phoenix in Q2 2015. Local property values also increased by 5.36 percent, increasing the value of Phoenix landlords' rental units at a healthy clip.
The only weakness of the Phoenix rental real estate market that the Q2 2015 Rental Ranking Report identified was its moderately low 5.85 percent capitalization rate. ("Cap rates" compare annual rents to property values and are commonly used by investors to assess the attractiveness of rental properties.) Given that Phoenix's cap rate was about 14 percent smaller than the national average in Q2 2015, prospective Phoenix rental property owners had more lucrative investment opportunities elsewhere during that time.
Q1 2015 Phoenix Rental Market Update
The Q1 2015 Rental Ranking Report ranks Phoenix as the second-best place for rental real estate investment in the Southwest and 17th out of the 75 U.S. metros evaluated in that report.
Phoenix's tax and insurance costs are among the most investor-friendly in the country, with annual home insurance premiums averaging just $691 and property taxes at less than 1 percent. What's more, Phoenix investors have strong price momentum going for them; house prices have risen by just over 7 percent, placing them 22nd out of the 75 Rental Ranking Report markets. Cap rates are 5.77 percent, which is respectable but not spectacular (the average U.S. cap rate is 7.18 percent). Job growth in the region is strong at 3.77 percent, 17th highest in the country for that metric.
What data is this Rental Ranking Report based on?
To calculate the statistics found in the Q2 2015 Rental Ranking Report, All Property Management gathered data, including the most recent government housing and jobs data, for 75 metros across the United States. Specifically, we looked at home vacancy, capitalization, home value appreciation and job growth rates, changes in rental prices, and the average number of days properties have been on the market to determine which U.S. metros will give investors the highest returns on rental investments. Click here to learn more about the Rental Ranking metrics.
Should I invest in Phoenix rental property?
There has never been a better time to invest in rental real estate in the Phoenix metropolitan area. Solid property value appreciation and job growth indicate that there is - and will likely continue to be - great demand for Phoenix rental housing for quarters to come.
Thinking about renting out a property in Phoenix? Save time, avoid hassle and maximize your rental income by having a professional property management company operate your rental property for you. Click here to get a free quote from a local property manager or call 877-780-4510 to have the All Property Management staff get quotes for you.
All Property Management specializes in connecting rental property owners with professional property managers in communities across the United States. These property managers help set rental rates, advertise properties, screen and manage tenants, collect rent, manage vendor relationships and ensure compliance with local, state and federal housing regulations. They take the hassle and worry out of managing rental properties - all while maximizing rental property owners' rental incomes.