According to multifamily data specialists RealFacts, the average rent for an apartment in Phoenix rose $1 in the first quarter of the year, going from $711 in December to $712 in March. More encouraging, however, is that occupancy rates climbed past the 90% mark, rising from 89.7% in December to 90.2% in March.

"This is the only market in the 11 states we cover that shows an increase in both occupancy and rent, albeit very small," Gerald Cox, with the Novato, CA-based research firm, tells GlobeSt.com.

Cox said the Valley's climate and job growth is bringing more people into the Metro Phoenix apartment market, but low interest rates and cheap housing are allowing tenants to move out of the rental market and into homes. Last year, homes valued at $150,000 or less were bought at a record pace, up 20% from the prior year, which put even more pressure on the Valley's rental market, Cox noted.

Adding to that pressure is the slowing of development of several new apartment communities which have caused occupancy figures to remain stable. But since many of those new communities demand higher rents, Cox said, overall rental rates have increased slightly.

In the past year, rents rose by 0.03%, indicating they are back to about where they were in first quarter 2002, erasing that year's gains and losses. Helping stabilize those occupancy figures is the slowed pace of new construction. According to the RealFacts report, 2002 construction was down about 2,000 units from construction a year earlier and a larger drop is predicted in 2003. RealFacts tracks the investment-grade market, with 100 or more market-rate units.