Tempe remains one of the most competitive rental submarkets in the Phoenix metro, fueled by strong student demand, limited supply, and institutional investor activity. Here’s what investors should know heading into mid-2025:
🏘️ Real Estate Market Overview
- Tight Inventory: While Phoenix listings are rising, Tempe inventory remains constrained relative to demand due to land scarcity and university-centered development restrictions.
- Price Correction: Like the broader market, Tempe has seen a slight drop in price per square foot—but remains one of the most expensive cities in the East Valley.
- New Development Slowdown: With fewer land opportunities and stricter zoning rules, single-family home construction has slowed, driving more interest toward existing homes and townhomes.
💼 Rental Market Snapshot
- High Rent Resilience: Rents continue to climb modestly due to persistent student and young professional demand.
- Increased Lease Turnover: The student rental cycle drives seasonal spikes in vacancy, but also gives investors predictable turnover patterns for strategic rent increases.
- More Evictions: Like other Valley cities, Tempe is seeing a jump in eviction filings—underscoring the need for strong tenant screening and proactive lease enforcement.
🔧 Property Management & Investor Trends
- Maintenance Costs Rising: Labor and materials remain a top concern for landlords, especially in older neighborhoods where homes need frequent repairs.
- PM Usage Growing: 52% of investors now use a third-party property manager. Those that do are more confident, experience fewer vacancies, and are better shielded from legal risk.
- Top Priorities for Tempe Investors:
- Keep units occupied through the summer pre-lease period.
- Maintain compliance with Tempe’s evolving rental licensing requirements.
- Reduce time-on-market by investing in modern upgrades tenants value (e.g., AC efficiency, in-unit laundry, Wi-Fi-ready homes).