Despite the expected, overall minimal contractions in quarter-over-quarter readings due to Covid, the Phoenix MSA continued to lead the nation in y/y rent growth, rising 5.4 percent to $1,233, nearly five times higher growth rate than the national average of 0.7 percent, but still $220 below the national average rent of $1,453.
Occupancy rates continue to remain elevated at 95 percent, despite decreasing 40bps over-the-year, and marks the 34th consecutive quarter occupancy has been above the 20-year average of 91.6 percent.
A little over 1,600 units came online Q2 2020, which is below the 2,000 unit moving 3-year delivery average. Given the current construction rate, 2020 should prove to be the highest delivery amount since 2009’s 9,315-units.
There are 20,309 units currently under construction throughout Greater Phoenix, the highest amount since Q1 2018’s 17,895, and marked the 25th consecutive quarter where the number of units under construction was above 10,000.
Investment sales volume significantly decreased 83 percent over-the-year to $294.88M across seven transactions, with average PPU (price per unit) increasing 15 percent to $184,187.
Outlook: Despite significant near-term volatility, from the potential for new lockdowns to the ongoing trade war to the CARES Act expiration, there are a few bright spots beginning to emerge.
One, despite significant increases in the number of Covid-positive cases, mortality rates have continued to decline. In fact, for Arizona residents age 64 or less the current, as of 7/9, mortality rate is 0.5%, in Maricopa County it drops to 0.3%.
Second, the employment bounce-back has been far higher than many anticipated; and finally, while there is nothing set in stone, there are several proposals currently being discussed in Washington to extend unemployment benefits beyond its July 25th end date.