In a story in today's Arizona Daily Star, reporter Beck Pallack took a look at how Arizona's law enacting sanctions against employers who hire undocumented workers is affecting the rental market in Tucson.  The Legal Arizona Workers Act, which went into effect January 1, 2008, contains enforcement provisions up to suspension of an employer's business license for 10 days with a first offense of hiring unauthorized workers and possible revocation of their business license for a 2nd offense.

Vacancy rates on Tucson's South Side leaped from 7.1% in the 4th quarter of 2006 to 11.9% in the same quarter of 2007 according to RealData, Inc.  The vacancy rate jumped at the same rate on the Southeast side, increasing from 5.9% to 10.7%.

Pallack illustrated an increase in "skips," tenants who move out suddenly with no warning, with statements from several property managers.  Their observations noted a skip rate 3 to 4 times that experienced a year ago.

Despite these statistics, the overall occupancy rates remain healthy at a 95.2% average, down just .3% from December 2006, with rents increasing slightly.  The abundance of homes for sale on the market could bring competition to the rental market, with sellers more willing to consider leasing a home that has been on the market a while.  This is going to be interesting to watch as the year rolls on.  With several factors at play, it is hard to pinpoint just what the overall effect will be.

The Arizona law is the first of its kind in the nation, with Tennessee employing a new, similar one and Oklahoma slated to enact one in July.