As we move deeper into 2025, Arizona’s rental market continues to evolve, presenting both opportunities and challenges for landlords. At Rosenbaum Realty Group, we’re committed to keeping you informed with the latest data and insights so you can make smart decisions for your investments. Drawing from Arizona Regional Multiple Listing Service (ARMLS) trends, national rental market statistics, and our on-the-ground expertise, here’s a breakdown of key trends shaping Arizona’s rental landscape this year—and what they mean for you.
Rental Demand and Pricing: A Steady Climb
Arizona’s rental market is buzzing with activity in 2025, fueled by steady population growth and a robust economy. Phoenix, the state’s rental epicenter, is seeing median rents for a one-bedroom apartment hover around $1,371 as of early March, according to Rent.com data. Arizona has ongoing appeal as a relocation destination, with new residents drawn by job opportunities and a warm climate
For landlords, this means demand remains strong, but it’s not a free-for-all. The influx of new apartment completions—over 7,000 units in Phoenix proper by late 2024, per AZ Big Media—has bumped vacancy rates to around 7.5% in the metro area, higher than the national 5.8%. While this gives renters more options, well-positioned properties with desirable features are still leasing quickly. Our advice? Price competitively but lean into upgrades like smart thermostats or energy-efficient appliances—tenants are willing to pay a premium for convenience and savings.
Interest Rates: A Double-Edged Sword
Rising interest rates, now averaging 6.63% for a 30-year fixed mortgage (Freddie Mac, March 2025), are reshaping Arizona’s real estate dynamics. On one hand, higher borrowing costs are sidelining would-be homebuyers, pushing them into the rental pool and boosting demand. Norada Real Estate notes that Phoenix’s affordability compared to coastal cities keeps this trend alive, making it a landlord’s market for now. On the other hand, those same rates increase your costs if you’re financing new acquisitions or renovations.
Nationally, the rental market is adjusting to these pressures. Steadily.com highlights that landlords face rising operational expenses—think cooling costs in Arizona’s heat—which can squeeze margins if rents don’t keep pace. For 2025, experts predict rates may stabilize around 6.3% by year-end (NAR via Houzeo), suggesting a holding pattern. Landlords should weigh buying opportunities carefully—cash-flow-positive properties in growth areas like Mesa or Tucson could be smart plays if you can lock in terms now.
Arizona vs. the National Picture
How does Arizona stack up nationally? Pretty favorably, but with nuances. The U.S. median rent sits at $1,556 (Apartments.com, January 2025), while Arizona’s statewide average for a two-bedroom is closer to $1,597 (Rent.com). Phoenix lags slightly behind at $1,393 for a two-bedroom, offering a value proposition that keeps tenants flocking here. Nationally, rental inventory grew 17% in 2023 (REsimpli), and Arizona mirrors this with a 26% jump in homes for sale (Redfin, January 2025)—a sign that supply is catching up.
Unlike states with rent control, Arizona’s lack of caps gives landlords flexibility to adjust rates, a boon in a growing market. However, the Harvard Joint Center for Housing Studies notes that 50% of U.S. renters spend over 30% of their income on housing—a trend echoed here, where the “housing wage” for a two-bedroom is $21.10 (NLIHC). Tenants are stretched, so steep increases could backfire. Balance is key: align rents with market comps to keep units filled without pricing out quality residents.
What Landlords Should Do in 2025
- Leverage Data for Pricing: Check your Owner’s Portal for real-time stats on your property’s performance. We’re tracking ARMLS and local trends to ensure your rents maximize returns without sitting vacant.
- Focus on Retention: With turnover costs averaging $1,000-$5,000 nationally, keeping tenants happy pays off. Small gestures—like our new bi-monthly air filter program—can boost satisfaction and renewals.
- Adapt to Tenant Priorities: REsimpli reports 40% of renters prioritize pet-friendly units and energy efficiency. In Arizona’s climate, solar panels or shaded patios could justify a rent bump and attract long-term leases.
- Watch the Horizon: Phoenix’s projected 60,833 new units by 2028 (AZ Big Media) will increase competition. Position your property now—location, condition, and amenities will set you apart.
Partner with Rosenbaum Realty Group
At Rosenbaum Realty Group, we’re not just watching the market—we’re ahead of it. Whether it’s filling vacancies fast, optimizing your rental income, or navigating interest rate shifts, we’ve got the tools and expertise to keep your investments thriving. Curious about your property’s potential in this market? Reach out to us today. Let’s make 2025 a standout year for your portfolio!
