Rents could hike another 20% as Valley deals with housing crunch
PHOENIX (3TV/CBS 5) -- Rent prices are surging at a record rate, and cities like Phoenix are getting hit the hardest. Rates in the Valley shot up almost 30% last year. It’s more than double the average increase across the country, and early projections show rents could climb another 20% this year.
With incomes not increasing at the same rate, many renters face tough decisions and are feeling the pain right now. Some Valley residents are receiving notices from their apartments saying their rent will be going up, in some cases a few hundred dollars, if they choose to re-sign.
Mark Stapp, a professor of real estate and the WP Carey School of Business at ASU, says this puts renters in a tough spot. “The average person renting a house or apartment, particularly apartments, has some really serious tradeoffs. You are either able to absorb this, it’s painful, you don’t like it, but you’re able to absorb it, but there are those who have to make those tough tradeoffs because they can’t absorb it,” he said. “One of two things happens. You are either able to pay it, but now you’re trading off other things in your life and the worst-case scenarios you’re trading off for instance medical care, or prescriptions. “Some of the other tradeoffs are, I got to move out of this apartment, but where do I go? So you make the choice to move to a lesser quality neighborhood or quality of apartment itself.”
Stapp says this is an issue of too much demand and not enough supply. As the market increases, apartment complexes have to follow suit and charge renters more. He feels action needs to be taken now by leaders.
“There is not an easy solution here, there really isn’t, and I really think part of the solution has to come from policymakers and from government and particularly local governments who have the ability to impact the speed at which new units are rented, the cost of those units and the density which allows units to be more efficiently added,” Stapp said.
There is some good news here, though. More help is on the way for those struggling to pay rent. There is a new round of Emergency Rental Assistance money for Arizonans, which will also help prevent evictions. Overall, the federal government is giving out millions of dollars, including $35 million for Phoenix alone and more than $500,000 to communities like Chandler and Glendale.
Stapp says it is hard to predict when renters could see relief in the future. “The next six months, no, the next year, I don’t think so. I think maybe 18 months to two years. There are other things that affect the economy, and we’ve added new uncertainties to the economy like a war and Ukraine,” Stapp said. “We have to be careful that this is also important to us as business owners, as economic development is looking to attract more business here, businesses need reliable, safe, quality, affordable housing for their employees in order to find a good place to locate your business.”
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