Phoenix Q3 Market Insights: Softer multifamily conditions despite continued job gains

Highlights:

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• While the local economy is still growing at a steady pace, operating conditions in the Phoenix multifamily market cooled in recent months. Future growth drivers remain healthy, and current property fundamentals are stronger than the market’s long-term averages.
• Vacancy rose 40 basis points in the third quarter, reaching 5.8 percent. The rate is up 180 basis points after reaching an all-time low one year ago.
• For the first time in more than a decade, rents inched lower in the third quarter, dipping 0.5 percent to $1,652 per month. Despite the minimal quarterly decline, current rents are up 7.1 percent year over year.
• The investment market softened during the third quarter as interest rates pushed higher. Cap rates rose, averaging 4.25 percent, while the number of property sales slowed.

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