Getting vacancy rate info in the multi-family rental industry is relatively easy, but for the rental industry that focuses on properties that aren’t multi-family it can be a challenge. So, I’m always keeping my eye out for useful data about the vacancy rates for single-family homes, condos, and other stand-alone rentals in my markets and came across some interesting data regarding Phoenix.
One of our best clients there, Bennett Property Management, manages over 2,000 units throughout the Phoenix MSA. For anyone who is looking for a residential property manager in the Phoenix area, I would highly recommend them. With such a large and diverse inventory, I would venture a guess that their properties are pretty representative of the market.
Yesterday, I was on their website and noticed a newsletter section in which they published this information:
Bennett Property Management Vacancy News
Nov 07 – Central Locations – 10.1% Fringe areas – 13.7%
Dec 07 – Central Locations – 9.5% Fringe areas – 14.8%
Jan 08 – Central Locations – 4.6% Fringe areas – 14.8%
Apr 08 – Central Locations – 5.2% Fringe areas – 8.7%
So in 6 months, the vacancy rate in the central locations has fallen from 10.1% to 5.2% and in the fringe areas it’s fallen from 13.7% to 8.7%. Now, one thing that I know has changed in this time period is that Bennett began advertising 100% of their listings on Rentals.com whereas in the past they didn’t always have their full inventory on our site. So, I think it’s fair to claim at least a little bit of credit for the drops in their vacancy rates.
However, I think a portion of the story can also be explained by the effects of the foreclosure crisis on the market there. Existing tenants not moving, renters not being able to buy, an increase in the tenant pool, etc.
For investors looking for the best places to buy rental homes though, Phoenix continues to appear to be an interesting opportunity. Home values have fallen back in excess of 20% and there still may be more declines. But with the continued growth of the Phoenix MSA thanks to baby-boomers and others relocating to the area I would expect to start seeing some stabilization soon. And with this apparent decline in the rental vacancy rates, there appears to be a good opportunity to buy under-valued homes and then rent them out to the increased tenant pool.
July 3, 2008 at 10:13 am
Interesting. I did not see any of Bennett’s inventory on Rentals.com so to take credit for that not only seems misleading, but it appears to be a blatant fabrication.
That aside, I suppose the intent of your article was to illustrate the decline in vacancy rates in the Phoenix/Metro area. This certainly comes as no surprise considering Arizona is a poster market for the real estate fallout that has effected so many home owners across the country over the last couple of years. Combine the credit crunch with double digit losses in appreciation out there and the pool of renters is increasing tremendously month over month.
I agree with you in regard to the investment opportunities. For true investors, Phoenix is an interesting investor market right now. It could present some excellent buy and hold opportunities with values being down while the economy continues to expand.
July 3, 2008 at 10:19 am
Hi Phil,
Thanks for visiting my blog and for your comment. Regarding Bennett, they currently have 132 listings on Rentals.com. If you go to http://www.rentals.com/Arizona/Phoenix/ and perform a keyword search for “Bennett” then you’ll find them all. http://794709.rentals.com is one example. I’m guessing you were trying to view their listings through a broken link.