Several cities in the Valley are national leaders in luxury rental properties, reflecting Arizona’s embrace of a fast-growing trend in the real estate market.
In a report released on June 11 by Point2Homes, which the ranks luxury home rental inventory among the 100 largest U.S. cities, Scottsdale was ranked No. 8 with 34% of single-family houses on the market classified as luxury. Phoenix also made the top 20, ranking No. 19, with a 13.5% of rental homes falling into the luxury category.
Other Arizona cities listed in the report include Glendale at No. 32 with a 6.6% share, Mesa at No. 37, 6.1% share, Chandler at No. 42, 4.9% share, Gilbert at No. 43 with a 4.8% share, and Tucson at No. 54 with a 2.1% share.
“This really shows how strong our Arizona market is, with more and more buyers and people moving to Arizona,” said Chris Karas, a Phoenix broker and founder of The Karas Group. “Arizona is super popular and one of the top places people want to move, whether it’s for jobs, weather or retirement.”
“If they’re coming from out of state, they want to ensure they are comfortable with their purchase,” Karas said. “They’re renting initially to explore more and become more familiar with the communities.”
Across the country, the inventory of build-to-rent homes, homes constructed specially as a rental rather than a purchase, jumped from 7,676 in 2020 to 27,495 in 2023, according to Yardi Systems Inc. Point2, a subsidiary of Yardi Systems, also reported that nearly 45,500 single-family rental homes are currently under construction across the country.
The study pointed out the renters earning over $150,000 annually contributed to the largest percentage increase in luxury rental growth between 2017 and 2022, with an increase of 105% compared to lower wage earners.
It is not surprising that four of the top five U.S. cities with the highest proportion of luxury rental homes are in California: Irvine at No. 1 (73.5%0), Los Angeles at No. 2 (58.9%); San Diego, at No. 4 (40.7%) and Anaheim at No. 5 (40.2%). One East Coast city, Boston, also made top five, ranking at No. 3 with (42.7%).
Ongoing economic uncertainty drives luxury home rental market growth
In the future, ongoing uncertainty regarding interest rates and the state of the economy following this year’s election could impact rental growth, according to Robert Joffe, a Scottsdale real estate broker with decades of experience.
“I am noticing worries about the upcoming elections and the fact that interest rates haven’t gone down. People who believe the economy will not be in a good position by the beginning of next year are certainly considering leasing instead of purchasing right now,” Joffe said.
Point2 also included an ultra-luxury home category, revealing that cities in the Valley continue to hold significant shares for these high-end single-family houses compared to other U.S. locations. Despite larger cities like Los Angeles, Miami, and New York, dominating the top spots, Scottsdale ranked No. 8 with a 7.3% share of ultra-luxury homes for rent, while Phoenix held the No. 10 position with a 3.7% share.
Glendale, holding an ultra-luxury home rental share of just over 3%, came at No. 13.
Back in June, Dallas-based Streetlights Residential listed The Bergen, an ultra luxury boutique community at 4240 E. Camelback Road in Phoenix, with monthly rents between $8,000 to $16,000. The price range significantly surpasses other top luxury apartments in metro Phoenix area.
