By Brent Ruffner | Daily Independent
High interest rates and the need for amenities have pushed some Valley renters to choose freestanding build to rent apartment homes.
Build-to-rent in Phoenix is booming.
There are currently more than 13,100 units under construction in the region with plans to build an additional 2,700, according to a Yardi Matrix press release. Arizona ranks second in that housing segment just behind Texas.
Nationwide, there are more than 110,000 units being built.
“There’s a lot of demand here for rental housing, said Kimberly Winson-Geideman at Arizona Research Center for Housing Equity and Sustainability at ASU. “There’s demand for a lot of (different) housing.”
Empty-nesters who don’t want a big mortgage payment and those age 30 and younger alike want amenities such as granite counter tops and a backyard, Winson-Geideman said.
For builders, build-to-rent units can be cheaper to build than houses. For renters, the monthly payment for a build-to-rent unit can “roughly” be about $1,000 less per month than a mortgage, Kimberly Winson-Geideman said.
“(Build-to-rent units) really appeal to the (younger) demographic,” Winson-Geideman said.
Now, current mortgage rates are 6.89% on a 30-year fixed mortgage, according to Freddie Mac. Adding a few percentage points can add hundreds of dollars to a monthly mortgage payment.
Swelling inflation hasn’t helped consumer confidence in the local housing market. In January, U.S. inflation “accelerated as the cost of groceries, gasoline and rents” rose, the Associated Press reported.
Build-to-rent builder Christopher Todd Communities built unattached units in the Valley from 2017 to about 2021, according to Martha Moyer Wagoner, a spokeswoman for Christopher Todd Communities.
But a saturated Phoenix metro has pushed the builder to the sidelines in constructing new units, Moyer Wagoner said.
“We are in an acquisition mode rather than development,” Moyer Wagoner said. “We are purchasing (build-to-rent) communities for less money than it costs to build them from the ground up right now. We expect that to shift in the next year or so in which case we’ll begin building again.”
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