Dwindling home inventory squeezes affordability The Chandler Arizonan

Dwindling home inventory squeezes affordability

Dwindling home inventory squeezes affordability
Business
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By PAUL MARYNIAK

Arizonan Executive Editor

 

As the inventory of available homes continues to shrink in Chandler and throughout the Valley, a new national study of rental housing indicates finding either an affordable house or apartment is getting more difficult.

The Joint Center for Housing Studies at Harvard University said the typical renter is becoming more well-to-do and the apartment construction industry is catering to this growing market sector by building more units considered “luxury”.

“Vacancy rates are at decades-long lows, pushing up rents far faster than incomes,” the study said. “Both the number and share of cost-burdened renters are again on the rise, especially among middle-income households.

“These conditions reflect fundamental market changes since the recession, including an influx of higher-income households, constraints on new supply, and substantial losses of low-cost rentals.”

The conclusions in the Harvard study differ from the analyses by two rental sites regularly examining rents across the country. Both apartmentlist.com and zumper.com said Phoenix is still more affordable than cities across the country.

The issue of rent costs is becoming more significant in the Valley housing market as the inventory of resale and new homes continue to reach what the Cromford Report recently called “shocking” levels.

 “The crucial issue for the housing market in Greater Phoenix is a chronic and severe lack of inventory,” the Cromford Report declared last week.

Cromford said the supply of homes throughout most of Maricopa and Pinal counties continues on a downward trajectory – with no bottom in sight.

A random check by the Arizonan of some Valley ZIP codes showed no home listed for sale when home buying seasonis  traditionally underway. For example, an 85225 had no listings late last month.

 “Casa Grande has a lot of new building going on thanks to having plenty of available land and relatively plentiful resale supply,” Cromford reported. “In fact, it has far more supply than Chandler.”

In looking at 29 cities in the Valley, Cromford found the decline in inventory between January 2019, and last month ranged from 18 percent in Gold Canyon to 74 percent in Laveen.

Phoenix dropped by 47 percent and the decline in East Valley municipalities was equal to or worse.

For example, inventory in Tempe dropped 40 percent between January 2019, while the percentage decline in Mesa was 45 percent, Chandler, 57 percent and Gilbert 60 percent.

Meanwhile, somewhat similar trends are occurring among rental units nationally, according to the Harvard study.

“When rentership rates hit bottom in 2004 during the homeownership boom, 18 percent of renters earned $75,000 or more and 42 percent earned less than $30,000,” the study said, adding the disparity “narrowed considerably” by 2019 with high-income households accounting for 23 percent of renters and low-income households for 38 percent.

“Renting has also become much more common among the age groups and family types traditionally more likely to own their housing,” it said, noting more people in all age groups, including seniors, had increased between 4 and 5 percent.

 “From the homeownership peak in 2004 to 2018, the number of married couples with children who owned homes fell by 2.7 million, while the number renting rose by 680,000. These changes mean families with children now make up a larger share of renter households (29 percent) than owner households (26 percent),” it added, declaring:

“The increase in renting among high-income, older, and larger households reflects fundamental shifts in the composition of demand.”

The study also reported median rent for unfurnished apartments was $1,620 in June 2019 – a 37 percent increase over the median in 2000.

 The study found  an “enormous growth in high-income households who are renters,” according to the lead author of the report.

Whitney Airgood-Obrycki told Realtor.com people who rent “increasingly need to have more money to do so” because most new apartment complexes only offer pricier, luxury units because they appeal to young professionals and more affluent older tenants who are downsizing or retiring

“Leases in nice buildings present an attractive alternative for white-collar professionals struggling with student debt or those living in ultra-pricey cities having trouble coming up with a down payment,” Realtor.com said.

Added Airgood-Obrycki: “There’s an ongoing affordability crisis that’s worsening again, “If [rents] just keep going up and up and up and incomes aren’t quite rising at the same pace for most households, then you get this gap.”

Meanwhile, apartmentlist.com, which tracks millions of apartments across the country, had some bright news for renters in Phoenix.

Despite year-over-year increases in rent of 3.7 percent – about twice the national average increase – apartmentlist said, “Phoenix still more affordable than most comparable cities across the country.”

Looking at the Valley more closely, it added, “Gilbert has the most expensive rents in the Phoenix metro, with a two-bedroom median of $1,540.”

It said Gilbert “has also seen rent growth of 5.2% over the past year, the fastest in the metro.

“Phoenix proper has the least expensive rents in the Phoenix metro, with a two-bedroom median of $1,101,” it continued, noting median rent was a third of the median monthly rent in San Francisco.

However, the data for the Valley provided by apartment list differed from zumper.com, which bills itself as the largest site for finding apartments.

It said Scottsdale had the highest rent and Gilbert took third while Phoenix proper ranked 8th out of nine Valley cities, with only Mesa rents ranking lower.

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