(Source: AZCentral): Catherine Reagor – Apartments are a hot commodity in metro Phoenix, and not just with renters. Investors are snatching up Valley apartment complexes almost daily for hefty prices. Last week, one of world’s largest real estate investors, New York-based Blackstone Group, went on an apartment-buying spree in metro Phoenix, purchasing six apartment complexes for almost $311 million.
Earlier this year, it bought five other Valley apartment complexes.
Buyers, mostly big ones from out of state, poured $1.5 billion into Phoenix-area apartments during the second quarter, according to ABI Multifamily. That’s up more than 13 percent from the same time frame last year
So why are metro Phoenix apartments so popular right now with investors?
The state is expected to grow by 1 million people by 2027, according to the Arizona Office of Economic Opportunity.
Most of those new residents will move to the Phoenix area, and they will need places to live.
Many people rent when they first move to a new city to see if they like a neighborhood, even if they can afford to buy.
That projected growth is also fueling a lot more apartment development. More than 9,000 new apartments are expected to go up in the Valley this year. And at least another 16,000 are planned.
Metro Phoenix rents are still climbing in most areas despite the new construction.
The Valley’s average apartment rent is about $1,060, up almost 7 percent from last year.
More than 95 percent of the area’s apartments are leased too, according to ABI.
Less pricey than other cities
More Valley renters are struggling to afford the rising rental costs. But the Phoenix area is still more affordable than other big U.S. metros.
Nationally, the average apartment rent is $1,409, according to research firm Yardi Matrix.
Renters pay an average of $2,250 in Los Angeles, $2,000 in Seattle and $1,500 in Denver.
Those are cities metro Phoenix is drawing the most residents from now.
What’s key is how much money renters make in those cities compared with metro Phoenix.
The Valley’s median household income is about $56,000. In Los Angeles it’s $62,000.
It’s easy to see why so many people are moving from Southern California to metro Phoenix.
And why investors are pouring so much money into Valley apartments.