"It's a surprising market," Caroline Latham, president of RealFacts, which commissioned the study of the Valley's large apartment complexes, tells GlobeSt.com. "It's a market where there has been no rent growth and no occupancy growth in several years yet investors recognize it as a healthy market." According to the study, the average rent for properties with 100 or more units dropped $1 during the third quarter from $714 to $713 while the average occupancy hovered at 90.2%, a 0.6% increase from a year earlier.
Latham says increased building in the Valley, which has added about 5,000 units annually for the last 10 years, is keeping both rents and occupancy stable. "If it were any other market, rents would have gone down with a thud with that much building," she points out.
Despite sluggish rental rates that have increased overall by just $5 since 2001, investors remain bullish on buying. Latham says "the balancing factor is that the population is expanding." About 4,000 new residents are added each month.
The Valley's growth spurt, coupled with its low land and labor costs, has made it a boomtown for investors, who are buying into the local market at record pace. But the flip side to that investment bonanza has been a stabilization in the Valley's apartment rates and occupancy levels, Latham notes. And the trend is expected to continue.
Latham says if the population grows as expected and multifamily developers continue to build at the current rate, rental and occupancy rates will remain in balance. Only when growth levels off and apartments become in short supply will the Valley see higher rents and fuller buildings, she explains.
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