These days, it is more than just the temps that are white hot in Phoenix. Competition among both buyers and lenders is heating up in the Phoenix apartment market.
Transaction volume is down from levels set in 2016, but demand is stronger than ever with a record high level of buyers and capital in the market. The common complaint is that there are more buyers than there are for-sale properties.
It is not unusual to have eight to 12 qualified bidders on a deal – twice the number that existed a few years ago. NorthMarq recently brokered a 200-unit, Class C, value-add sale in Phoenix that drew 12 offers with five going into a best and final. At the end, there were four very credit-worthy bidders who all had offers in within $100,000. The financing available for the acquisition was a 10-year fixed rate of 4.40 percent, 75 percent LTV and an initial five-year, interest only.
The main driver behind this appetite for apartments is that buyers see a good growth story. Phoenix has come a long way since its housing bubble burst more than a decade ago. The metro is enjoying strong employment and job growth with more than 50,000 plus jobs being created and 80,000-plus new residents moving to the area annually.