Phoenix, AZ Sun Belt boomtown; affordable prices and strong population growth driving sustained demand. This report covers current market conditions, the full investment arithmetic on a median-priced rental, and where Phoenix ranks against the 19 other metros tracked here.
Current Market Snapshot
Investment Analysis
With a gross yield of 5.2% and a median price of $395,000, Phoenix sits in the moderate yield range. A typical 2-bedroom property rents for approximately $1,711/month based on HUD Fair Market Rent data.
The affordability index of 84 suggests housing costs exceed what the median household can comfortably afford — watch for affordability-driven demand moderation.
Market Temperature: Warm
With a median DOM of 32 days and approximately 6,800 active listings and balanced competition, Phoenix's market is currently classified as warm. Balanced conditions allow time for due diligence and negotiation.
The Numbers on a Median-Priced Rental
Buying the median Phoenix home at $395,000 with 20% down takes $90,850 in cash — a $79,000 deposit plus roughly $11,850 in closing costs at 3% — and leaves a $316,000 loan. At 7.0% over 30 years that is $2,102/month in principal and interest.
On those assumptions the median Phoenix rental produces a 1.9% cap rate and falls roughly $1,477 a month short of covering debt service. Cash-on-cash return on the $90,850 invested is -19.51%, and the debt service coverage ratio is 0.3× — below 1.0×, meaning the property cannot service its own debt at 20% down — this is an appreciation play, not a cash flow one. On a rent basis, you need $3,457 a month to break even — 102% above the $1,711 HUD benchmark.
Rate and Rent Sensitivity
Financing cost dominates the outcome. One percentage point on the mortgage rate moves monthly cash flow by more than a 10% swing in rent does:
| Mortgage Rate | P+I Payment | Monthly Cash Flow |
|---|---|---|
| 6.0% | $1,895/mo | -$1,270/mo |
| 7.0% | $2,102/mo | -$1,477/mo |
| 8.0% | $2,319/mo | -$1,694/mo |
| Rent Scenario | Monthly Rent | Cap Rate | Monthly Cash Flow |
|---|---|---|---|
| HUD FMR − 10% | $1,539/mo | 1.46% | -$1,623/mo |
| HUD FMR | $1,711/mo | 1.9% | -$1,477/mo |
| HUD FMR + 10% | $1,882/mo | 2.34% | -$1,333/mo |
How Phoenix Ranks
Among the 20 metros covered here, Phoenix is 10th by gross rental yield and 9th most expensive. Its 5.2% yield sits above the 5.15% median of the set, and its $395,000 price sits above the $390,000 median. The price-to-rent ratio is 19.2× and the price-to-income ratio is 5.8× against a median household income of $68,000.
The metros closest to Phoenix on gross yield are Las Vegas, NV (5.3%), Charlotte, NC (5.1%), Nashville, TN (5.0%). If Phoenix is on your list, those are the markets whose numbers you should be holding it against — not the national average.
What Has to Be True for Phoenix to Work
A median-priced rental here consumes $17,724 a year in cash. That is not automatically a bad deal: the same loan repays $3,210 of principal in year one, so the true first-year drag is about $14,514. To break even on the cash line alone the property has to appreciate 4.49% a year, against the +2.1% the metro has actually posted over the past twelve months. Hold it five years and amortisation alone builds $18,544 of equity — the question is whether you can fund the shortfall for that long without selling at the wrong moment.
Key Data Points
| Metric | Value |
|---|---|
| Median Sale Price | $395,000 |
| YoY Price Change | +2.1% |
| Median Days on Market | 32 days |
| Active Listings | 6,800 |
| Est. 2BR Fair Market Rent | $1,711/mo |
| Gross Rental Yield | 5.2% |
| Median Household Income | $68,000 |
| Affordability Index | 84 |
| Price-to-Rent Ratio | 19.2× |
| Price-to-Income Ratio | 5.8× |
| Gross Rent Multiplier | 19.2 |
| Cap Rate (45% expense basis) | 1.9% |
| Cash Flow at 20% Down | -$1,477/mo |
| Cash-on-Cash Return | -19.51% |
| Break-Even Rent | $3,457/mo |
Getting Live Data via API
ZipMarketData provides live data for all ZIP codes within the Phoenix, AZ metro. Use the /market-stats endpoint with any Phoenix ZIP code for the most current figures — or run the same analysis without writing code in the dashboard.