Multifamily is hot in Phoenix — maybe too hot? Belfiore weighs in

New apartments in downtown Phoenix, Arizona, on a sunny day. / Getty / Forbes

By Ellen Barber | Forbes

The multifamily sector in Phoenix has been making headlines lately. The fifth-largest city in the U.S. had the nation’s fastest-rising rents in November, according to data from Yardi Matrix, a California-based provider of commercial real estate market information.

“Job growth and strong in-migration continue to fuel the desert Southwest,” says this source. And Phoenix is a prime example. Through the third quarter of 2019, the metro added 54,300 jobs year-over-year, Cushman & Wakefield reports. And Arizona as a whole continues to see net population gains as people move from other states, according to the latest data from the U.S. Census Bureau

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“The Metro Phoenix Area rental market has continued to perform, overall.  Absorptions have slowed recently in select suburban market areas, as more significant levels of upper-priced new product has come to market.  The frothiness suggested by individual investors’ ability to purchase newly-constructed homes in some areas, too, suggest monthly rental prices are high.  We’re suggesting multifamily builders underwrite to existing newer communities rather than planning for a continuation of 5%-plus annual rental appreciation.”

~Jim Belfiore, founder and president Belfiore Real Estate Consulting

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