Q3 2022 Multifamily Real Estate Report: Phoenix, AZ

After two-quarters of extraordinary growth, the Phoenix multifamily market has started to cool down. Vacancies were up significantly this quarter, and average asking rates showed their first decline in nearly a decade.  Additionally, sales activity withdrew slightly this quarter, although transaction prices were higher than in the previous quarter, and cap rates continued to grow. Like most other cities, some of this slowdown can be attributed to rising interest rates. Fortunately, construction on new units is proceeding as planned, with high numbers for multifamily permitting.  On the other hand, Phoenix’s economy is performing well, with low unemployment and employment rapidly expanding. Phoenix added over 88,000 individual workers to the payroll, with significant growth rates in the healthcare and tech industries. General Area Overview & Demographics Phoenix is the capital and largest city in Arizona and has a population of 1.6 million as of 2023. The median age is 34, and the median household income is $60,914. Phoenix has historically been a good city for investment in real estate because it has relatively few construction and development constraints.  Phoenix occupies a hot desert climate characterized by long, dry summers and short, mild winters. Daily temperatures in the summer routinely reach over 100 degrees F, and the city receives very little rainfall throughout the year.  Phoenix boasts a strong economy with a significant presence in the real estate, financial, manufacturing, and healthcare sectors. Phoenix is home to several Fortune 500 companies, including PetSmart, Avnet, and waste removal company Republic Services.  Summary of Phoenix Multifamily…