Business and mass communication senior Matt Branham didn't expect to pay $750 monthly to live in a one-bedroom apartment when he moved to Tempe from Illinois.
He settled into his new home at the Quadrangles Village Apartments last month anyway, justifying the costs by evaluating the "nice sized area" around him and the decent size of his place. But he said he still thought his rent was overpriced.
"It would be about half as pricey in Illinois," the BIS major said.
Branham isn't alone.
All across Tempe, apartment rental rates are on the rise - and the trend doesn't seem to be slowing down any time soon.
"As fewer and fewer people are able to purchase homes, we are really seeing rental rates go up," said Kent Gagon of First USA Realty.
Gagon added that the onset of condo conversions, where apartment complexes convert into individual condominiums for sale, also contributes to increases in rental rates. The reason is because many conversions are so overpriced that people who want to buy are often still forced to rent, he said.
Pete TeKampe of Marcus and Millichap, which analyzed Arizona Apartment Industry Statistics, agreed.
His statistics show the average rental in north Tempe for the first quarter was $753 a month and $799 a month for south Tempe, both higher than the Valley average of $725. While the $725 average is a record high in the Valley, at the same time, TeKampe's report shows vacancies and concessions - deals apartments offer, like a free month's rent - are low.
"Tempe rents tend to be 5, 6 or 7 percent higher than what the rest of the cities are at," TeKampe said, noting exceptions like north Paradise Valley, where average rents are up to $917 per month.
"But while north Tempe is slightly higher than what the averages are, south Tempe is significantly higher than the average," he said.
South Tempe apartments, south of the Superstition Freeway, typically have newer buildings and more amenities to offset the higher rents, he added.
"Those rents will climb," TeKampe said. "If you're a student planning on staying somewhere for four years and expecting to pay the same rate the entire time, you're going to be unpleasantly surprised."
But at the Arizona Real Estate Center at ASU's Polytechnic campus, Director Jay Butler said projections about the future of Tempe's apartment rental market are "argumentative in the industry" and could be slower than others may expect based on supply and demand.
Condo conversions might slow down the apartment market, as the condo conversion market is not as organized as the apartment market is, which has drawn many students' parents toward buying condominiums rather than having their student rent, Butler said.
Butler said he projects the real increases to be at ASU's other campuses like the downtown location, where enrollment figures are still going up. In turn, University communities tend to drive more people to the area, students and non-students alike, who seek the rich culture surrounding campus life.
"Tempe campus's student population will remain consistent, while the growth is at the other campuses," Butler said.
While acknowledging the increases in demand and rents in Tempe, Butler said it would be difficult to sustain such increases for an extended period and believes the rises will taper off sooner than many expect.
"[The market] is going to depend on the intensity of the supply, so when the semester starts, you might want to wait," Butler said. "But most of us want to sign the lease and wait for school to start."
On the other hand, waiting might mean losing the opportunity to secure a place, as apartments around Tempe are filling up quickly. Many are already full for the upcoming semester. A random sample of complexes around Tempe by The State Press found about half of those sampled were already full for the fall semester, while others had few apartments available.
Reach the reporter at lily.yan@asu.edu.
