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Real Estate Industry Responding to Flagstaff’s Strong Rental Market

The Bungalows on Pine Cliff are near completion. Cavan Companies is building 23 homes on McMillan Mesa in response to Flagstaff’s growing rental market.

Increasing student population, housing market collapse, growing trend are contributing to demand

Homes with million-dollar views from McMillan Mesa will soon be available for rent. Scottsdale-based Cavan Companies is building 23 single-story homes and expects to have them market-ready by the end of next month. But they will not be for sale.

“We are pleased to enter the Flagstaff rental market with the Bungalows on Pine Cliff,” said Dave Cavan, founder and chairman of Cavan Companies. “Our research showed a need for rental properties with modern amenities and great access to schools, shopping and work, so we’re happy to be part of the solution. We are excited to meet Flagstaff’s growing need for high quality rentals.”

Marketing Coordinator Allison Macaulay says the one-, two- and three-bedroom units of the master-planned community will have the look and feel of a home, with more privacy and less noise than a typical apartment complex, and without the headaches of homeownership. She anticipates the Bungalows will be occupied quickly.

“The rental market in Flagstaff is very tight. NAU has grown by 10 percent in the last three years and if they don’t have on-campus housing available, students have been looking for rental housing in the nearby surrounding area,” she said, adding that Flagstaff’s residential population is growing as well. “It is expected to grow by 1,000 people per year over the next 10 years and 4,000 rental units will be needed in the next 10 years to meet this demand.”

In addition, she says there is a growing trend away from homeownership. “There’s been such a shift that homeownership is at a 40-year low. The renter group has really surged, particularly among millennials, and people are changing the way they think about homeownership. A lot of people don’t want to be tied to a mortgage and don’t want the cost of maintaining a home.”

Cavan research points to other factors influencing the rental trend. “People are still getting over foreclosures, student debt is at an all-time high and mortgage lending requirements are limiting the number of people who can qualify for a loan,” said Macaulay.

Coldwell Banker manages more than 700 rental units in Flagstaff. Real estate agent Allen Ginsberg confirms that there are not enough places available now to meet the need, and demand will continue to outpace supply. “When the housing market collapsed, builders haven’t been building. We’re going to run into a real shortage, not that we don’t have one now.”

Bryan Burton with Robinson and Associates Real Estate says the demand has changed the way he rents properties. “Now when there’s a rental available, I have an open house with set hours, like I’m trying to sell it. Last May, a rental property near NAU had 45 people standing out in front before the open house started.”

Burton recently rented another property through the open house method. “The first person who came in gave me an application, and I took it.”

Real estate agents say rental prices vary depending on location, number of rooms, upgrades and amenities, but renters should expect an average cost range to start around $750 a month for a one bedroom. They say college students living together in one house, each paying $650-$750 per room, can afford more than many families can pay.

Dan Berman has been buying real estate and managing rental property for 40 years in Flagstaff. “In the long term, real estate is a good thing to own pretty much anywhere, and in Flagstaff it’s even better. When we had the housing crash eight years ago, the rental market just went berserk because people couldn’t afford to buy. So the rental rate in Flagstaff has skyrocketed in the last 10 years, particularly in the downtown area or near NAU, where people really want to be.

Berman says the situation is the same in Sedona, Boulder, Vail and Aspen. “Any time that you live in a place where everybody wants to live, people will pay a premium because these are exceptional places.”

“Flagstaff is probably the least expensive of all the high elevation communities in the West, like Telluride, Lake Tahoe, Aspen and Vail,” said Ginsberg. “We’re more expensive than we were 10, 20 or 30 years ago and we’re going to be more expensive 10 years from now. Flagstaff is a great place to live and we don’t have a lot of available land to grow on.”

Macaulay says monthly rental costs for Bungalows on Pine Cliff have not yet been announced, but the company is already looking ahead to the project’s next phase with more than 100 units. FBN

For more information about Cavan’s Flagstaff development, visit bungalowsonpinecliff.com.

 

 

 

 

By Bonnie Stevens, FBN

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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