Source: Phoenix Business Journal | Angela Gonzales

Single-family home rent prices experienced extensive growth during 2021 nationwide, increasing an average of 7.8% compared to 2.6% in 2020, according to CoreLogic's latest Single-Family Rent Index.

In metro Phoenix, single-family rents rose 18.9% year over year in December 2021, up from 11.1% in December 2020.

"Strong employment growth and a fast-growing population has added to the demand for single-family rental homes," said Molly Boesel, CoreLogic economist.

A separate report by Colliers International found that monthly rents at a single-family rental home were $2,241 at the end of 2021, up from $1,887 in 2020.

In the Valley, homebuyer demand is causing a downward spiral of the average number of single-family rentals, said Thomas Brophy, research director for Colliers International.

The average number of single-family rentals decreased 12% year over year to 1,629 units as homebuyer demand outpaced rentals, he said.

Looking ahead, while slowing home price appreciation could help gradually balance demand for the rental market, rent prices likely will remain strong throughout the year, Boesel said.

"Single-family rent growth had a record-breaking year in 2021, bolstered by increasing employment and low vacancy rate," Boesel said. "However, as rents make up one-third of the Consumer Price Index, rapid rent growth helped push up inflation in 2021."

While rent growth should ease in 2022, inflation may remain elevated for much of the year, she said.

Rent growth comes at a time when affordability challenges and limited supply created barriers to home purchasing for many prospective buyers, she said.

Meanwhile, consumer confidence fell in the latter half of the year, partly because of rising inflation, pushing many to hold on big ticket purchases like homebuying.

These factors have driven elevated demand for single-family rentals and put increased pressure on the market as vacancy rates also hit historical lows.

 


 

Closer look

Single-family rents

Year over year growth in December

Metro Phoenix

18.9%: 2021

11.1%: 2020

Source: CoreLogic

Single-family monthly rental rates

Metro Phoenix

2021: $2,241

2020: $1,887

2019: $1,709

2018: $1,611

2017: $1,493

2016: $1,444

2015: $1,381

Source: Colliers International