Phoenix Metro Area has experienced a hot housing market since the onset of the COVID-19 pandemic due to the shortage of homes for sale and an increase in demand for rentals. The high demand and less supply contributed to the skyrocketing of home prices and rental prices. According to the Arizona Housing Department (AHD), over 300,000 houses and rentals are needed to ease the current housing shortage crisis.
Luckily, in Phoenix Metro Area, the narrative is changing and housing affordability is now a reality thanks to the many multifamily homebuilders who are engaged in active construction projects. Strong market fundamentals such as rapid population growth, high employment rates, household demographics, and low cost of living are making Phoenix Metro Area attractive for multifamily investments as the demand is high.
How are multifamily homebuilders managing to build affordable homes?
Homebuilders in Phoenix Metro Area and new multifamily investors are buying a huge chunk of land in the valley with an intention of building high-rise multifamily affordable housing units. These high-rise multifamily housing units can either be 3, 4, 5, or more stories where many people can live together. Such strategies make it easier and affordable to buy as homebuyers will not be required to incur costs to build all the infrastructures that are needed for a new subdivision in the case of a single-family unit.
Renters are also able to get affordable rates as they are able to share most amenities in one residential unit thus, lowering the management and maintenance costs that the multifamily investor would incur. Moving forward, we are going to witness an increase in new construction of high-rise multifamily buildings throughout the Phoenix valley area that range from apartments, condos, rent-to-own, or rentals-only projects.
There is a high number of multifamily real estate investors who are constructing brand new multifamily housing units specifically targeting renters only. This is a new concept that we are witnessing in Phoenix Metro Area as homebuilders make effort to handle the current housing crisis. In the coming months, there will be many new developments of high-rise multifamily housing units in the Phoenix Metro Area that will be more affordable compared to single-family housing units.