With unemployment in the Phoenix Metropolitan area falling below 8% for the first time since 2008, and hiring projected to continue increasing through 2013, renter demand remained healthy throughout 2012. Demand is expected to increase as the economy continues to stabilize. The Phoenix housing market is noticeably trending upward, recovering from the pitfalls of the recession. Foreclosures have slowed dramatically and home prices are on the rise. A growing housing market often indicates a slowing multifamily market but Phoenix, as one of the fasting growing metropolitan areas, is expected to see its population of renters grow exponentially. In a recent study by Forbes, Phoenix was ranked the 8th fastest growing city, based on a set of data including population, job and economic growth, unemployment and median salaries. The Phoenix Metropolitan area experienced job growth twice the rate of the national pace, rising 3.2% in 2012 with 55,100 new positions being created. With the continued growth of the valley a consistent and substantial multifamily market will remain.
Total sales volume in the Phoenix Multifamily Market during 2012 increased 28% over the previous year with the average selling price per unit increasing by roughly 30%, up to $72,204 per unit. In properties with 100 or more units, rents increased in the fourth quarter of 2012 to $775 per unit or $0.92 per SF. Five submarkets in the valley recorded rents higher than $900 during the final quarter of 2012; the Sky Harbor/Central City submarket posted average rents of $1,113, and North Scottsdale and Fountain Hills posted an average of $932. The lowest average rent was $554 in the Central Black Canyon submarket.
Vacancy increased slightly in the final quarter of 2012 to 8.2%. Overall, fifteen submarkets saw improvements in vacancy by the end of 2012. The highest declines in vacancy rates occurred in the Union Hills/Cave Creek submarket and the Northeast Central Phoenix submarket. Over a one-year period Metro Phoenix experienced a 2,669 unit increase in occupancy with the Union Hills/Cave Creek submarket posting the largest increase of 846 units, while the North Central Phoenix submarket suffered the highest loss of 238 units.