The Arizona rental market

Our 4 unit apartment building in Prescott Valley, Arizona will finally have no vacancies next month for the first time in over 6 months.

The collapse of the housing market over the last year hit Prescott Valley especially hard. It had been the fastest growing city in the U.S., surpassing even Las Vegas in new home building. Thousands of construction workers had moved into the area for all of the jobs, and they all needed places to stay. The rental market had been very good, and rents had increased about 25% over the last 4 years. When the bottom dropped out of housing construction, the jobs went away and the workers did, too. I ended up with 3 vacancies out of my 4 units, and everyone else in the area had similar problems.

My solution was to lower my rents drastically, back to 2003 levels. Within one month of my rent decrease all of my units were rented again. In a falling market, it's best to lead the market down and not follow it. The math made it an easy decision, too. The $350 a month that I'm giving-up in lower rents isn't one-quarter of my loss in having 3 vacancies. I'd rather have them rented at a lower rate than vacant for even one more month. I only wish I'd done this months ago. Oh, well. Hindsight is 20-20, right?