If PHX and its surrounding areas continue to have new construction units come on board at the rate they are today, this building boom could very well leave 1-6 month … or even longer rental vacancies in many areas, IMHO (yes, “humble”).
It won’t matter if it’s a “nice unit” in a “nice area.” They will undoubtedly take longer to fill again, especially if the owner is “picky.”
These PHX builders (and the PTB who approved the permits/subdivisions) are obviously assuming that there will be buyers/tenants for every one of the units that are currently being built and slated to be built.
PHX was “grossly overbuilt” when builders returned to that market in the last ~year. What if a large percentage of the buyers of new construction coming online there are actually locals? If so, they will vacate the home they sold or rented when they close escrow on their new home. If they were tenants, one more rental unit is added to the mix. If they rented their previous home out instead of sold it, one more rental home is added to the mix.
This “displacement” of population from existing housing to new housing is creating vacancy, the same as it did all over CA during its “building boom” of 2000-2007. This would be a long-term concern of mine if I were thinking of investing in rental property in the PHX area.
SK, if you are around, can you tell us if you think Phoenix’s growth rate will be high enough in the coming years to absorb all that is currently being built and slated to be built there, as well as a good portion of the current resale inventory and rental vacancies?
