I track a number of things fairly faithfully, but I’ll confess I don’t track Phoenix area rentals on a regular basis. Every now and again though, L will humor me and look up the current number. Here’s what he sent me yesterday:
Total number of properties found: 8845 Active for rent on MLS
Total number of properties found: 57876 Active for sale on MLS
Total number of properties found: 24699 Active for sale show vacant on MLS 43%
It seemed that the number of actives was rising faster than it had earlier in the year, so I dug up what history I had, and saw this interesting trend in Phoenix rentals:
I’m assuming that as we neared the end of the summer, more sellers were telling their agents, "If you can’t sell it, let’s rent it out. Carrying this thing is killing me." A number of sellers already have tenants in their properties, L said 1937 properties show "tenants rights" on the listing.
As L indicated, our vacancy rate is at 43%, and the rate has remained in the 40s for well over a year. That’s a lot of people carrying a lot of vacant properties for a long time. Obviously the rentals already on the market are not being absorbed- the number keeps rising. While this should be good news for renters as the glut will keep downward pressure on rents, it means that it’s not only getting tougher to be a home seller, but tougher to be a landlord as well. Look for this to increase the number of foreclosures when sellers can’t manage their cash flow.
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I live in Goodyear and this chart exemplifies the conditions that are growing here. It appears that there are many sellers trying to lease out the homes in an area just east of where I live, I mean we’re talking anywhere from 4 to 7 homes per block, granted that some streets have regular home owners, but there seems to be a large number of these homes with lockboxes on the front and no body home. Sad times.
Jasaz98-
There’s a progression that we keep seeing in newer neighborhoods. First is the forest of “for sale” signs. After awhile, a lot of those change to “for rent” and FSBO signs- then the owners start walking away.
Sad times indeed.
As a residential property manager I have seen rents drop 20% in areas like Queen Creek and Supirse. Forget moving anything in Maricopa.
The properties close in are holding steady for now. No increases, but they aren’t going down.
Our clients understand that the sales market is bad. Now I am explaining the effect that market has on the rental market. Most of them are not happy campers. However, slow bleeding is still preferable to gushing when it comes to negitive cash flow. And the clients know there is no point is putting the properties on the market for sale.
Just wondering if there might be double counting of the for rents + for sales. In other words, are there 8845 for rent PLUS 57876 for sale? Or are some of the for rents included in the for sales? thanks
Evinx-
Many of these properties are listed for both sale or rent. Generally sellers want a sale, but will take a renter if they have to.
There are probably more vacant houses that are staged that are not listed as vacant if you really want to get down and dig.
Twist that sure seems to be a logical progression from for sale, for rent, FSBO and then they walk. I have to wonder if we will reach the point when forclosures will equal sales for the month.
I find myself in the unenviable position as many of these would be renters. I bought in summer of 2005 after a bidding war with an investor. I moved to the area because of a job and bought a house as a place to live, not as an investment. Luckily I didn’t listen to what all the investors were saying and get the most house I could afford. I did not bite off more than I could chew and had a pretty low fixed-rate mortgage of 5.35%. I just moved out of state this October of this year for another new job (we are now renting in the new place). My house has been vacant for 1 month now and with the market so bad I am considering renting it out. In hindsight, my judgment to not get the most house I could afford turned out to be good. I can make both rent and mortgage payments for now (not saving anything or contributing to 401(k)). With my fixed rate I don’t have to worry about my payments fluctuating.
I’m just pissed that all these investors who said that real estate never goes down ruined the market for many years to come for “normal” buyers like me.
Metro-
Johnson Ranch is a pleasant enough place, but it has it’s problems. The commute into Phoenix is awful- the roads aren’t adequate, and won’t be for years. Foreclosures and abandoned homes are all over the place. A lot of homes out there were sold at the very top of the market.
There are a lot of foreclosures. I was driving down one street out there and there were three abandoned homes in a row on one side, then there was two abandoned, one occupied, one abandoned on the other side. Sometimes abandonments are hard to spot, other times whatever didn’t fit on the truck gets left in the yard. There’s a whole bunch of them though.
Builsers are still active out there, so it’s like a big foreclosure engine just keeps going. It’s a shame, because it’s a pretty area with the San Tans to the west, and a nice view toward Florence to the east.
This is the biggest haircut I’ve seen out there, but it’s the wave of the future. There is too much supply and it’s growing. My opinion on prices out there is “You ain’t seen nothin’ yet.”
Dear “Normal Buyer”,
I have no sympathy for people who didn’t have enough common sense to look up historical trends in prices in the Phx metro area, and then belly aches about not being able to sell in 2007 at 2005 prices. I bet if prices stayed at 2005 highs until you sold, that you would have had no complaints. I didn’t buy in 2004-2005 because I thought it was ODD that prices on crappy condo conversions in Scottsdale doubled in 10-12 months. It’s called COMMON SENSE!!! Anyone who carpetbags into this state and leaves a few years later for a better job and leaves their unwanted pets, children, trash and/or overpriced tract home behind deserves what you get and much more! People who live here full time for decades are SICK of opportunistic carpetbaggers.
venetiancafe -
I think that’s a bit harsh… Or maybe just flame bait.
People move in and out of areas for all kinds of reasons. There’s nothing at all wrong with it. Here, our normal buyer needed to move and wanted to buy a house. We now know he likely over paid but no one new for sure what would happen in the future and that was the market at the time. At least he bought what he could afford.
Whenever prices go against you, you’re likely to grumble a little. That’s normal, right?
The people to criticize are the ones that bought houses they couldn’t afford. That’s irresponsible.
Venetiancafe-
I have to confess I’m a reformed idiot- I suppose you could say that Doom was my therapy. The only reason I didn’t buy another house in 2005 after selling my other one was that we had changed our plans to move out of state, and I couldn’t figure out how to buy another home and close in two days.
I’ll tell you, I was pretty bummed as I read in the Republic about rampant appreciation all that summer. My neighbors were turning into millionaires, as I sat in a stupid rental.
Now there are those times now that I don’t bother with the confession, I just say, “Yeah, I sold in April 2005, and now I live in a rental.” I like having people think I was pretty smart, when in fact I was just unbelievably lucky.
Too many people didn’t do their research- I didn’t until a year later when I went to buy and said, “Wait a minute, these prices don’t make sense to me.”
At least in the current market, a lot of people are realizing that RE doesn’t always go up, stocks don’t always go up- nothing is sure except death and taxes. A whole bunch of us weren’t paying attention at the top- but we are paying attention now.
I moved to the Phoenix area in summer 2004 and after losing out on a few buying opportunities and housing practically doubling overnight, I felt the allure of Phoenix was lost, so, we stayed as renters.
I sold my home in summer 2004 in Sacramento, CA, for a handsome profit. I sold about 1 year prior to the peak. I only did so because I did not want to be an out of state landlord and possibly have to deal with difficult people. But, I did realize the incomes in Phoenix did not justify the prices and decided to wait it out.
A couple months ago, a great job opportunity fell into my lap which required me to relocate to San Antonio, TX. Now that I am here, I am renting through the school year and plan to buy in May or June; however, I don’t feel any “pressure” or sense of urgency to buy right this minute.
Though prices are declining, I chuckle when I see the wishful list prices of some homes in the Phoenix area via Ziprealty. I see home prices declining or flat lining in Phoenix for years to come.