House hunters out this spring will have to pound more and more pavement to find their home sweet home.
The number of for-sale listings fell again in December to the lowest level since 1999, according to the National Association of Realtors. There were just 1.65 million homes for sale at the end of December, which at the current sales pace would take only about 3 ½ months to exhaust. A normal, balanced market has about a six-month supply.
This, as the busy spring market is already on the verge of starting. “To say early buyer demand is strong in early 2017 is an understatement — it is titanic. Redfin data shows that buyers are out touring in droves, ready to pounce on new listings that fit the bill,” said Nela Richardson, chief economist at Redfin. “The only thing missing is homes for sale to satisfy demand, because there just aren’t a lot of homes available to buy right now. We are in a real estate black hole until those listings show up again.”
In some local markets, the situation is more dire. The share of communities with supply at less than three months jumped from about 13 percent to more than 20 percent in the past year, according to a survey by Proteck Valuation Services, a real estate appraisal and analytics company. For example, in Dallas, the supply of homes for sale dropped by nearly 41 percent from December 2015 to December 2016.
“This means fierce competition for homes, where buyers that are able to act fast and pose less risk to the seller have the advantage. These ‘favored’ buyers would include those already pre-approved for a mortgage, those with larger cash down payments and those with no contingencies (like the sale of another home),” according to the Proteck report.
The shortage is being driven by surging demand and weak home construction. Single-family housing starts continue to rise, but very slowly each month. Builders are still operating at well below normal construction levels, and that doesn’t even account for pent-up demand from the housing crisis and growing household formation.
“The homeownership rate is at a near 50-year low, and it could remain at this level,” said Lawrence Yun, chief economist at the NAR. “I’m not sure if this is the trend that America wants.”
copyright © 2017 Realtor Market Insider
New-home shoppers will likely see higher prices in metro Phoenix this year. Don’t expect a big jump, but home builders are poised to start raising prices to offset their rising costs.
Shoppers for newly built homes will likely see higher prices in metro Phoenix this year. Don’t expect a big jump, but builders are poised to start raising prices to offset rising costs of land and labor. Arizona housing analyst Jim Belfiore predicts new-home prices in the Valley will climb an average of 7 percent to 9 percent this year. In 2016, new-home prices in the area climbed about 2 percent.
“Appreciation is the biggest issue for the home-building industry now,” Belfiore told a packed room of home builders, developers and others in the real estate industry at his annual Valley housing forecast on Thursday. That’s because the cost of building has climbed 50 percent in the past two years,” he explained.
“The market’s recovery feels good now but not great,” said Meritage Homes Corp. CEO Steve Hilton. “Home costs are up, but margins are low.”
Valley builders are out of the bargain land they were able to buy during the housing crash in the Great Recession, and a shortage of construction workers has driven up building costs. The median price of a new Valley home was about $311,000 in November, according to RL Brown’s Phoenix Housing Market Letter. That’s only about $1,000 more than it was in June of last year.
Home builders also can likely raise prices more this year because demand from buyers has picked up. The new-home market’s recovery to boom levels is still years away, but about 18,000 houses were built Valleywide in 2016. That’s the most since the end of the boom when more than 60,000 were built during 2006-07. Based on what the builders said at the forecast, most of the new homes will be more affordable and geared toward first-time buyers, particularly Millennials.
Mark Moskal, division president of Gehan Homes, said rising interest rates mean buyers can afford less house. The average rate on a 30-year mortgage climbed from 3.5 percent in August to 4.3 percent last week, according to Freddie Mac. The home builders on the panel all agreed they would focus on more affordable homes to try to tap the growing number of first-time buyers in metro Phoenix this year.
“Millennials are the biggest opportunity that lies ahead for the housing market,” said Greg Abrams, vice president for Pulte Homes.
And rising rents are propelling more Millennials to buy. But it’s not clear yet how much more they are willing to pay for a new home. That’s the million-dollar question for Valley home builders now.
copyright © 2017 azcentral.com
While some criteria for classifying a building as a core asset a decade ago still remain, changing trends in the market and tenant demands are recalibrating the way we think about core assets in the Valley. Property value, land scarcity and an institutional component originally drove market demand for core assets. The same is true today for the most part, but now tenants also look for an urban environment, walkability, amenities and features to help attract and retain employees to the area through the experiences being offered.
“A core asset is one whose value first-and-foremost is retained over time, with the expectation of reliable appreciation,” says Gary Linhart, co-founder and principal at ViaWest Group. Adding to the property’s value is location and limited supply of available land for new developments.
Older properties like the Esplanade and Biltmore Center, largely considered two of the Valley’s most prominent and well-recognized core assets, are starting to show signs of its age and required interior and exterior tenant improvements to keep up with today’s standards. “When it [Biltmore Center, formerly Biltmore Financial Center] was built, it was designed for the long-term, with the highest quality finishes at the time, at the top intersection in Phoenix,” explains Linhart. “However, in order for a core asset to stay a core asset, reinvestment is necessary to keep the building up-to-date with changing trends and tastes.”
So when his company purchased the building last year, its task was to transform the aging structure with upgraded features and amenities to meet current tenant demands. Whereas, newer buildings like Hayden Ferry Lakeside in Downtown Tempe and CityScape in Downtown Phoenix, already have the needed state-of-the-art features built in. Linhart identifies Downtown Scottsdale, Downtown Tempe, Camelback Corridor and Downtown Phoenix as the markets with core assets, which all have nuances that make them different.
“These core assets are in areas where the top companies want to and need to be,” he explains. “At any time, it has to offer to the top tenants in the marketplace the experience, technology and quality of space they demand.”
Today’s core assets are unique in the ability to transform a building and its surroundings into a premiere destination by creating a first-class experience for those entering it. “You have to look at each project holistically; how it ties to its natural surroundings, flexibility, and how people emotionally connect with said place,” explains Rory Carder, president of DAVIS. “Any core asset, no matter what city, requires walkability; it’s the essence of urbanization.” Although Phoenix is still a young city, she thinks it’s making strides in the right direction. “A core asset flourishes on the people that inhabit them,” explains Carder. “It thrives on the energy you feel from that specific piece of real estate.” Carder refers to her offices at Hayden Ferry Lakeside as an example of a core asset in Downtown Tempe where employees can explore any of the nearby businesses or enjoy a yoga session in the park overlooking Tempe Town Lake.
The old corporate environment of the 1980s and 90s is fading away. Instead, employees want options that fit their flex schedules and lifestyles. Linhart says, “The common areas, such as outdoor spaces with shaded seating areas, tenant lounges, fitness centers, on-site restaurants, coffee shops and lobbies are becoming vital components of a core asset.”
Back in the day, a strong institutional corporate tenant and a few nearby restaurants were enough to attract high-end tenants. State-of-the-art structural features were always expected and still are, but the delivery of a quality tenant experience is what sets these buildings apart from the others. Linhart explains, “In a wired-world in which people can work from anywhere, an office building that wants to attract paying tenants must provide an experience, particularly if the office building owners wish to command a premium rent.”
Kevin Calihan, senior vice president of CBRE, echoes that point. Companies need to be in a good position to compete for a quality workforce with a site that will attract Millennials and the educated employees.“Companies want to give their employees high quality of life, a great work environment and that’s what locations like The Galleria and Hayden Ferry Lakeside provide.”
The Galleria Corporate Centre in Downtown Scottsdale, an old mall converted into class A office space, is largely considered a core asset by today’s standards. Calihan says the change in demand to be in close promiximity to retail, entertainment and hospiliatilty options thrusted the Galleria into its current core asset status, which wasn’t the case for the failed mall ten years ago.
Downtown Phoenix’s CityScape is a prime example of a core asset for its location, proximity to nearby amenties, elegant finishes and sheer size, which contributes to its success and 95-percent lease rate. It has all the needed ingredients: amenities, growing urbanization, booming residential developments and entertainment venues. Location, prestige, supply and demand still remain important in securing high-level tenants at core assets, but today’s standards also require an atmosphere for those entering to remember and want, which differentiates a core asset from any other ordinary building.
copyright © 2016 azbigmedia.com
On October 28, Tesla unveiled its new solar roof tiles. Few of us in attendance, if any, realized the solar roofing tiles were actual functional solar panels until Elon Musk said so. Sure, it’s a neat trick, but what’s the big deal?
Why does it matter that Tesla is making a fashion statement when the point is green power and a future where we aren’t so dependent on fossil fuels?
I’ve heard from some people suggesting that this is nothing new, because of other similar previous projects, including Dow Chemical’s canned solar shingle project, for example. Others are wary of Tesla’s ability to sway consumers with a solar solution that sounds like it’ll still be quite expensive in terms of up-front (or, with payment plans, deferred but net) installation costs. Still others aren’t clear on Tesla’s goals with this product, or how it fits into the company’s overall strategy relative to its electric vehicles.
It’s easy to dismiss the aesthetic import of how Tesla’s tiles look, but it’s actually important, and a real consideration for homeowners looking to build new homes or revamp their existing ones. The appearance of the tiles, which come in four distinct flavors (Textured Glass, Slate Glass, Tuscan Glass and Smooth Glass) is going to be a core consideration for prospective buyers, especially those at the top end of the addressable market with the disposable income available to do everything they can to ensure their home looks as good as it possibly can.
As with other kinds of technologies that are looking to make the leap from outlier oddity to mainstream mainstay, solar has a hurdle to leap in terms of customer perception. Existing solar designs, and even so-called attempts to make them more consistent with traditional offerings like the above-mentioned Dow Chemical project, leave a lot to be desired in terms of creating something that can be broadly described as good-looking.
It’s like the VR headset — Oculus and Google can make claims about their use of fabric making their headsets more approachable, but both are still just options somewhere along the curve of things with niche appeal. Neither is very likely to strike a truly broad audience of users as acceptable, and neither are solar panels that don’t succeed in completely disguising themselves as such.
Tesla has been referred to as the Apple of the automotive world by more than a few analysts and members of the media, and if there’s one thing Apple does well, it’s capitalize on the so-called “halo effect.” This is the phenomenon whereby customers of one of its lines of business are likely to become customers of some of the others; iPhone buyers tend to often go on to own a Mac, for instance.
For Tesla, this represents an opportunity to jump-start its home solar business (which it’ll take on in earnest provided its planned acquisition of SolarCity goes through) through the knock-on effects of its brisk Tesla EV sales, including the tremendous pre-order interest for the Model 3. It’s strange to think of halo effects with big-ticket items, including vehicles and home energy systems, but Tesla’s fan base shares a lot of characteristics with Apple’s, and because they’re already purchasing at the level of an entire automobile, the frame of reference for what constitutes a valid halo purchase is actually appropriate.
Tesla, like Apple, scores well with customer satisfaction and brand commitment, and that’s something that no one trying to sell a solar home energy system at scale can match. As strange as it sounds, “buying a roof because you like your car” might be the new “buying a computer because you like your phone.”
Tesla’s solar tiles claim to be able to power a standard home, and provide spare power via the new Powerwall 2 battery in case of inclement weather or other outages. Musk says that the overall cost will still be less than installing a regular old roof and paying the electric company for power from conventional sources. But Musk’s claims about the new benefits of the new solutions don’t end there.
Tesla’s tiles will actually be more resilient than traditional roofing materials, including terra-cotta, clay and slate tiles. That’s because of the toughness of the glass used in their construction, making them theoretically more resistant to potential damage from elements like hail, or even debris like fallen tree branches. In fact, Musk also said at the event that the roofs should far outlast the standard 20-year life cycle common for roofing materials used today — by as much as two or even three times. Fewer roof tile replacements means more value, provided that’s not already factored into his estimates of the up-front cost.
There’s also the possibility that the new tiles could become more efficient than existing solar panel options. Though in their current form, Musk says they achieve 98 percent of the efficiency of regular panels. He said that the company is working with 3M on coatings that could help light enter the panel and then refract within, letting it capture even more of the potential energy it carries to translate that into consumable power.
The announcement of Tesla’s solar tiles does not guarantee a sweeping solar power revolution; far from it, since Tesla says it won’t start installing the product in any consumer homes until next year, and a lot can happen between now and then. But Musk also said with full confidence that he ultimately expects the Powerwall to outsell Tesla cars, and easily so.
Solar roofing, Powerwall and Tesla cars taken together represent a new kind of ecosystem in consumer tech, one that carries a promise of self-sufficiency in addition to ecological benefits. Tesla has already tipped its hand with respect to how it intends to make vehicle ownership a revenue generator for its drivers, rather than a cost center. You can see how it might eventually do the same for solar power using solar tile roofs combined with Powerwalls installed in series, giving homeowners surplus power generation and storage with a few different potential options for monetizing the excess (including, say, acting as a supercharger station for other Teslas, or selling back to the grid).
It’s tempting to look at Tesla’s unveiling last week and think that it’s more of an incremental development in the home solar industry. But it’s more likely a step toward a future where individuals have more direct control over power generation, leading to a big difference in how we think about renewable energy.
copyright © 2016 techcrunch.com
This is not a good week for California economic developers.
In addition to bad press and a torpedoed effort to solve its housing crisis, CNBC has a report saying Californians in burgeoning high tech markets have the hardest time trying to qualify for a mortgage.
No wonder companies are starting to plant new offices and expansions in Arizona.
Add the CNBC cable channel to the national media piling it on the Golden State. The New York Times and Inc. — as well as us here at the Phoenix Business Journal — have reported on how a number of California businesses are adding staff in Phoenix, as well as other markets outside the Golden State.
On the CNBC list of 37 metros, Phoenix fell into the middle of the pack, ranking No. 17 on the list of “ easiest cities to get a mortgage.” It also ranked more affordable than the markets against which it competes the most.
Housing price differentials were not part of the ranking, but the New York Times story said that housing in Phoenix costs one quarter of the typical San Francisco home.
CNBC reports that in Phoenix, the average home buyer needs a FICO score of 743, and is going to borrow at a loan-to-value of 84 percent.
In the Valley’s top competing markets — Denver, Seattle, Bay Area and Los Angeles — in addition to substantially higher home prices, higher credit scores and bigger down payments are required.
Denver’s average home buyer needs a 754 credit rating and carries an 82 percent loan to value mortgage. In Seattle, ranked one spot lower, a FICO of 755 is reuqired and 81 percent loan-to-value.
CNBC ranked the top 37 markets, so Austin was not included in the mix.
The toughest markets to qualify for loans — in addition to housing prices — were Los Angeles, New York, and the Bay Area including Oakland, San Jose and San Francisco. Credit score averages ran from 758 in Los Angeles to 770 in San Francisco. Los Angeles averaged a 75 percent loan-to-value, dropping to a national-worst lowest loan-to-value of 72 percent in San Francisco.
Of the CNBC markets, Detroit was the easiest market in which to qualify for a mortgage with a 728 FICO and a 90 percent loan-to-value.
copyright © 2016 Phoenix Business Blog
Britain’s vote to exit from the European Union hurt U.S. stock markets temporarily, but it could help homebuyers. Both stock prices and U.S. interest rates started falling June 24, the day after Brexit – The average rate for a 30-year-fixed mortgage is now about 3.45 percent, the lowest it’s been since 2012.
“The uncertainty created with Brexit should keep U.S. rates down longer,” Arizona economist Elliott Pollack told me from Austria, where he is vacationing and getting a closer view of fallout from Brexit. “That’s good for housing.”
A little explainer:
When stock markets stumble, more investors opt to buy U.S. Treasury bonds. An increase in buyers pushes up bond prices but drives down their yields or interest rates. And the yield on 10-year Treasury bonds correlates the closest with mortgage rates.
“You get bad news and interest rates fall,” David Newcombe, a co-founder of Scottsdale-based Launch Real Estate, told me. He lived in London until moving to Phoenix in 2003. It’s still unclear how Brexit will shake out because the market rebounded by week’s end. Current lower interest rates mean homebuyers can afford a house that costs 8 percent more than they could at the beginning of the year, according to Realtor.com economist Jonathan Smoke. Homebuyers aren’t the only ones who benefit. If you are a homeowner, it’s a good time to think about refinancing. The monthly payment on a $250,000 mortgage with a 3.5 percent rate is about $220 cheaper than a loan with a 5 percent interest rate.
Stock market declines do often have a negative impact on housing. Last August, when stocks dove over concerns about an economic slowdown in China, luxury-home markets in the U.S. slowed. Metro Phoenix’s luxury market definitely did. Of course, that’s because many million-dollar homebuyers have bigger stakes in stocks than typical buyers.
“The sudden drop in the stock market will be negative for the luxury market,” Arizona housing analyst and British citizen Mike Orr told me. But he doesn’t expect the impact will last long. Orr does think the drop in interest rates could be a longer-term trend. U.S. stock markets started to rally on Wednesday and Thursday, something analysts attribute to an ease over concerns about Brexit’s economic impact. Maybe a $200 or more drop in a monthly mortgage payment can help ease the pain of a drop in our 401(K) accounts this month.
Maybe just a bit.
copyright © 2016 azcentral.com
April just might have been the best month for metro Phoenix’s housing market in a decade. A look at key indicators and some national rankings show why the Valley’s housing market appears to be stronger than it’s been since the boom and crash. Foreclosures fell to the lowest level since 2006. Homebuilding continued to rebound. Phoenix kept its spot as one of most affordable big metro areas for homebuyers. And a national moving survey shows the Valley is one of the top 10 U.S. areas where people are moving. Also, many of the buyers needed for the Valley’s housing market to finally fully recover are here.
An April Street Scout survey of Valley homebuyers and sellers found Millennials and boomerangbuyers who lost houses to foreclosure during the crash are buying metro Phoenix homes at a pace the market hasn’t seen before.
– Home sales in metro Phoenix climbed to 9,041 in April, an almost 8 percent jump from last April, according to data compiled for this column by Arizona housing expert Mike Orr of The Cromford Report.
– Condominium sales reached 1,637 last month, up 1,514 from April 2015.
– The Valley’s median home price rose to $235,000, up from $215,000 a year ago.
– The median condo price reached $146,500 last month, compared with $142,000 a year ago.
– Banks foreclosed on only 231Phoenix-area houses in April, the lowest level since December 2006, according to The Information Market.
– Homebuilding in the Valley is up 25 percent from last year’s pace, according to RL Brown Housing Reports.
Despite home-price increases, metro Phoenix is still the eighth most affordable big U.S. metro area to buy a home, according to the latest quarterly ranking from national mortgage firm HSH.com. The Valley has held that spot for the past year. And finally, moving company U-Haul’s annual survey for the most one-way rentals in 2015 came out this week. Metro Phoenix ranked 10th nationally for the most popular place for people to move. Despite the upbeat signs for the housing market, Orr is careful in how he describe its current status. He told me the Valley’s housing market is a bit “complicated” now.
Orr’s quick take:
– For homes priced below $200,000, there’s an extremely low supply available for sale, fast price appreciation and low sales counts.
– For homes priced between $200,000 and $500,000, the supply of homes for sale is slightly low, there’s strong growth in demand and moderate price appreciation.
– For homes priced between $500,000 and $1 million, there’s a high supply available for sale, good demand and little to no appreciation
– For homes priced higher than $1 million, there’s excessive supply, weakening demand and flat to negative appreciation except for in a few isolated fashionable spots.
Tom Ruff of The Information Market said May’s home sales and prices are likely to be higher than April’s when all are tallied. Summer’s 100-plus-degree days deter some Valley homebuyers. If home sales and prices continue to climb In June and July, it will be a true testament to the market’s strength. If not, there’s always the fall.
copyright © 2016 azcentral.com
Rents for homes, condominiums and apartments climbed sharply in many Valley neighborhoods during the past few years and are still on the rise. More Millennials and boomerang buyers bouncing back after foreclosure are purchasing metro Phoenix homes than ever.
But it’s not just because they want a place of their own. Rents for homes, condominiums and apartments climbed sharply in many Valley neighborhoods during the past few years and are still on the rise. Billy Day and Jessica Simms bought their first home earlier this year after their rent jumped in central Scottsdale. The couple were able to find a renovated home in their price range in the popular area so they could stay close to their jobs, favorite restaurants and places to hang out. “Our lease was coming to an end and upon evaluating the cost of rent, it was a better financial decision to purchase,” Simms told me.
For homes and condos, the average monthly lease rate in metro Phoenix rose 10 percent during the past year to $1,454, according to the Arizona Regional Multiple Listing Service’s April report. Apartment rents in the Phoenix area jumped 8 percent during the past year, according to the most recent Yardi Matrix report. The Valley ranks No. 7 for the biggest rent increase among major U.S. metro areas. The average apartment renter in metro Phoenix is paying almost $1,000 a month.
Rents are rising faster in some neighborhoods than others, particularly in central parts of Phoenix, Scottsdale and Tempe. Those areas, closer to restaurants, shopping, jobs and light rail are also seeing some of the biggest increases in home prices. The Midtown Phoenix neighborhood Cheery Lynn/The Yard in ZIP code 85014 saw home prices jump 50 percent during the past year, according to Street Scout Home Values, an annual analysis of metro Phoenix’s housing market done with The Information Market. That was the biggest jump for any Valley neighborhood.
It’s tough to find an affordable home in many central Valley neighborhoods now. The many investors who purchased Valley foreclosure homes on the cheap during the crash and turned them into rentals are reaping the reward of higher rents now, and most aren’t inclined to sell. Apartment developers are following buyers and renters. Anyone who has driven central Phoenix, Scottsdale, Tempe and parts of Chandler has seen the many apartment complexes under construction. Most of those developments are luxury complexes with higher-than-average rents. More available rentals in popular Valley neighborhoods will increase supply. If demand from renters doesn’t climb as quickly, then rent increases could slow.
copyright © 2016 The Republic | azcentral.com
Slow & Steady Wins the Race
By Molly Carson, VP Development
Ryan Companies US, Inc.
Some believe there are global and domestic issues to be concerned about in 2016 and the not so distant future: the pending presidential election, historically low oil prices and unstable Chinese economy, rising interest rates and so on. These concerns may keep you awake at night.
Why do I feel optimistic – specifically for Arizona? Because with all of the concerns circulating throughout the globe. Arizona continues to experience solid growth – slow and steady growth.
The recession recovery has been both weaker and slower for the nation past recoveries – for Arizona that’s not necessarily a bad thing. The recovery foe our state has not been led by the housing market like in years past it’s been grounded in something much more substantial. An increase in quality employment opportunities due to businesses expansion and new companies locating in Arizona has been very positive. Arizona has seen solid growth in jobs in financial services, professional and technical services fields; industries offering a measure of higher incomes and greater diversity to the state’s economy – issues and hospitality also continue to thrive. Typically the primary driver in an economy uptick, the Arizona housing market is recently starting to contribute in a meaningful way. Arizona’s housing market arguably entered 2016 with one of the largest backlogs ever – a double digits increase from 2015 in permits pulled is projected. A diverse foundation of growth means a continued and more stable recovery.
Is this just a stable recovery? Yes, and that’s ok by me.
The Arizona commercial real estate industry continues to experience positive net absorption in the office market, declining vacancy and rent appreciation. Bifurcated growth albeit, with urban markets like Tempe, South Scottsdale, Chandler and Metropolitan Phoenix are performing far better than (suburban/rural) areas – definitely a positive trend the underlying economic fundamental continue to help our commercial property market to a slow, sustainable growth. This is not the quick recoveries we have been accustomed to, but I believe this will led to a strong foundation moving forward with a decreased risk of sharp, future economic dip.
For the next few years, projection shows Arizona to have one of our nation’s fastest rates of job growth. The stable continues to improve in attracting firms rooted in technologies and innovation. ASU was named the number 1 school in the United States for innovation; it’s no wonder company’s like Go Daddy, Avnet, Amkor and Intel continue to invest in Arizona – our brand is stronger than ever. The Arizona’s time to flourish – I encourage all of you in the commercial market as well as other market, to keep the positive momentum going: Arizona it on its way to win the race.
As vice president of development, Molly is responsible for its selection and acquisition, municipal use permits and approves design and construction coordination, financial packaging and lease or sale negotiation.
copyright © 2016 Ryan Companies US, Inc.
How New Home Sales & Construction Permits
Compare to Last Year (and before the crash)
By Mike Sunnucks, Senior Reporter
Phoenix Business Journal
April 18, 2016
New home sales and new residential construction permits are continuing their 2016 rise — at least when compared to 2015. But they are still down from pre-recession levels when builders were building and banks handing out mortgages that built toward a Hindenburg-scale bubble and crash.
Scottsdale-based RL Brown Housing Reports’ latest data batch shows new home sales were up 47.6 percent in March versus a year ago. Builders sold 1,408 homes last month versus 954 in March 2015. For the year, home sales are up 37 percent for the first quarter compared to a year earlier, according to RL Brown. Builders applied for 4,258 construction permits for new homes in the Valley during the first quarter. That is up 32.5 percent from the same period in 2015, according to the Scottsdale real estate research firm.
But how are the current numbers comparing to before Arizona’s calamitous real estate crash? The first quarter of 2005 saw builders pull 15,381 permits for new homes, according to RL Brown and a past Phoenix Business Journal report. Builders took out a record 63,570 permits in 2005. They pulled 12,868 permits in the first quarter of 2006.
The housing market has improved over last year but there is a marked difference between now and from when the bubble was about to burst. Existing home sales were up 8.7 in the first quarter of 2016 versus the same period in 2015 (21,736 homes sold vs. 19,995), according to RL Brown.
copyright © 2016 Phoenix Business Journal
Make $44,000? You Can Afford a
Median-Priced Home in Metro Phoenix!
By Catherine Reagor
The Republic | azcentral.com
March 4, 2016
A homebuyer needs to earn about $44,000 a year to afford the $1,025 monthly payments on a median-priced Valley house costing about $221,000, according to national mortgage firm HSH.com’s latest analysis.
That salary is based on a buyer coming up with a 20 percent down payment, about $44,000 for a $221,000 house — the same amount needed in annual pay to buy that home. However, this study was done before the median price of a Valley home jumped $10,000 in December, a trend that could push the area down on the ranking if income increases don’t keep up.
Pittsburgh is the most affordable U.S. metro area. Homebuyers only need to earn $31,134 a year to afford the city’s median home price of $128,000. San Francisco is the U.S. least affordable city for U.S. homebuyers. The median home price in the northern California city is $781,600, and to afford that a buyer has to make at least a $148,000 a year.
First-time homebuyers can get Federal Housing Administration Mortgages that require much less than a 20 percent down payment — as little as 3 percent. Lower down payments mean higher principle balances and bigger monthly payments. A Phoenix homebuyer putting down 10 percent on a $221,000 house must make almost $52,000 a year to afford the payment, according to HSH.
The mortgage-research firm also tracks mortgage interest rates, property taxes and insurances cost by city for its affordability ranking.
copyright © 2016 The Republic | azcentral.com
Home Prices Accelerate at Fastest Pace in 16 Months!
By Andrea Riquier
January 26, 2016
Tight inventory pushes home prices higher in November; San Francisco, Portland, Denver register 11% jumps
U.S. home-price gains picked up again in November, with several metro areas notching double-digit annual percentage increases.
The S&P/Case-Shiller 20-City Composite Index rose 0.1% in the three months ending in November, for a 5.8% yearly increase. That was up from a 5.5% yearly gain in the period ending in October, and marked the strongest reading since July 2014. Portland prices were the strongest, rising 11.1% compared with a year ago. San Francisco, at 11%, and Denver, at 10.9%, followed. Some 14 cities had stronger yearly price gains in November than in October.
While the composite index is still roughly 12% lower than the peak set in summer 2006, Dallas, Denver and Portland have all touched fresh highs. San Francisco prices have pulled even with the earlier peak. Only five cities had monthly price decreases, down from eight in October. Chicago was weakest, notching a 0.7% decline. It also had the smallest yearly gain, 2%.
“Low mortgage rates, tight supplies and an improving labor market” are pushing prices higher, said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. Despite solid demand in the housing market, the economy faces headwinds, Blitzer noted, including a strong dollar and the slump in the oil patch.
City Monthly Change Yearly Change:
Atlanta -0.3% 5.7%
Boston -0.5% 4.7%
Charlotte 0.3% 5.3%
Chicago -0.7% 2.0%
Cleveland 0% 2.2%
Dallas 0.2% 9.4%
Denver 0.1% 10.9%
Detroit 0.1% 6.3%
Las Vegas -0.1% 5.2%
Los Angeles 0.3% 6.2%
Miami 0.8% 8.1%
Minneapolis 0.1% 4.8%
New York -0.3% 3.7%
Phoenix 0.3% 5.9%
Portland 0.3% 11.1%
San Diego 0.3% 6.0%
San Francisco 0.3% 11.0%
Seattle 0.5% 9.7%
Tampa 0.5% 6.0%
Washington 0.1% 2.1%
20-City Composite 0.1% 5.8%
Andrea Riquier: 415-439-6400; AskNewswires@dowjones.com
copyright © 2016 Market Watch
Where The Baby Boomers Live in Metro Phoenix
By Angela Gonzales
Phoenix Business Journal
For the first time in modern history, the U.S. Census Bureau projects that until the mid-2030s, the number of people age 65 and over will far exceed the number entering the 15-64 working-age population. By 2029, when all of the baby boomers will be 65 years and older, more than 20 percent of the total U.S. population will be over the age of 65, according to the U.S. Census Bureau.
This got Paul Johnson, founder of Phoenix-based Maps & Facts Unlimited Inc., thinking about what that means for the real estate industry in the Phoenix area. “Continuing until 2030, the population of residents 65 and older will grossly outnumber the 15-64 working population,” Johnson said. “The idea was that seniors will be selling their houses and the younger people won’t be able to afford to buy them.”
He expects to see single-family home prices nationally under pressure for quite a while.
“The dream of younger people buying a home and having a backyard and a dog and everything is going to be harder to achieve because they’re going to be burdened with the extra costs of supporting all these old people,” he said.
Looking at the Maps & Facts maps, Julie Johnson, executive vice president of GPE Commercial Advisors LLC in Phoenix, said she sees incredible opportunity for growth in the senior housing industry in the metro Phoenix area.
“People want to age in place as long as they can typically, but some of these new senior housing facilities are absolutely like the Ritz Carlton,” she said. “These places have every first-class amenity and every luxury that the baby boomers are used to and have been spoiled with, and are going to be demanding as they get older.”
She said more health care real estate investment trusts are investing in senior housing projects.
“Right now, about 50 percent of their portfolios are senior housing properties,” she said. That’s changed from years past when they were mostly interested in investing in medical office buildings.
But senior housing properties are less risky to them, she said.
“The operator is the secret sauce to a successful facility,” Julie Johnson said. “If its a high, 85 percent plus occupancy, that means everything is working well and the risk factors are gone.”
copyright © 2016 Phoenix Business Blog
Type of House Millennials Can Afford
By Steven Totten
Phoenix Business Journal
More than 43 percent of adults under 35 were buying homes in 2005. In the third quarter of this year, only about 35 percent of millennials were doing the same.
But for those born between 1980 and 2000, living in Phoenix means you can get a heck of a lot of space.
Personal finance technology company SmartAsset looked at the median income and net worth of Americans under 35 in 23 of the nation’s largest cities, and applied average price per square foot of real estate in each city to determine how large a home each value represents.
The result? Phoenix millennials can afford a home worth $172,000 on average, or roughly 1,400-square feet, according to data from Zillow.
For Phoenicians across the age bracket, a salary over $43,000 means you can afford a house here.
Compare that to 135 square feet in San Francisco, or 165 square feet in New York, and living in Phoenix starts to look pretty ritzy.
copyright © 2015 Phoenix Business Blog
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Mortgage Applications Rise 2.3%
By Diana Olick
Buyers are returning to the housing market in ever growing numbers, as indicated by continued gains in loan applications to purchase a home.
Total mortgage application volume rose 2.3 percent week to week on a seasonally adjusted basis for the week ending April 17th, according to the Mortgage Bankers Association (MBA). The gain was driven largely by purchase applications, not refinances, even despite lower mortgage rates.
“Purchase applications increased for the fourth time in five weeks as we proceed further into the spring home buying season,” said Mike Fratantoni, chief economist for the MBA. “Applications for FHA [government insured] purchase loans remained strong as well.”
Mortgage applications to buy a home increased 5 percent from the previous week and are now 16 percent higher than the same week one year ago. Applications to refinance increased just one percent, but they are still up 41 percent from a year ago, when rates were considerably higher, around 4.25 percent.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) last week decreased to 3.83 percent, its lowest level since January 2015, from 3.87 percent, with points decreasing to 0.32 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, according to the MBA survey.
Rates haven’t moved very much lately, which may be why homeowners have seen little incentive to refinance. “In general, there’s a pervasive air of dispassionate complacency,” wrote Matthew Graham of Mortgage News Daily, regarding what he called the “flatness” of rates. “It would be easy to assume that the gorilla will reach the room when the Fed Announcement comes out next Wednesday, but then again, markets might be let down by a lack of ‘clues’ regarding the Fed’s rate hike timeline.”
While most analysts expect rates to rise through the course of this year, some now believe they could go even lower, given how little overseas bond markets have to offer investors. If investors continue to buy U.S. Treasury bonds, and if a still slow housing market means fewer-than-average mortgages and mortgage-backed securities are issued, rates in fact could move lower.
copyright © 2015 cnbc.com
Renting is Now Twice as Expensive as Buying Houses in the US
By Jay Yen
Renting is now twice as expensive as buying in the USAs rents all over the US continue to soar upwards, online real estate database Zillow has recently found out that renting a home is now twice as expensive as buying one.
According to their recent affordability report, in the third quarter of 2014, renters in the US were spending an average of 30 per cent of their monthly incomes on rent, while homeowners were spending just 15 per cent of their monthly incomes on their mortgage payment.
These findings shed light on a major shift that has occurred in the US housing market over the past few years. In the years before the real estate bubble, between 1985 and 2000, rent was usually more affordable compared to buying houses, in most US cities. Now, in most American metros, if you can just come up with a down payment, you are much better off buying your own house than renting.
Even in the cities which have always been famous for high rents — the likes of Boston, San Francisco, Los Angeles, Seattle and New York — renting was more affordable than buying before the US real estate market crashed in 2008. However, since then, rents have been on a steady upward trend across the country while the cost of buying a home has been falling in many parts of the country, to a point where renting is now the less affordable option — sometimes by a huge difference.
This trend of renting being half as affordable as buying a home is one of the reasons why many housing marketing experts believe 2015 will be the year that most Millennials finally break through and enter the real estate market to buy their first home. It is predicted that the persistently high rents will push many of these young potential buyers into homeownership as it continues to make less financial sense to continue renting if they can put together a down payment.
However, it won’t be easy for everyone – some renters, especially the younger ones, are spending so much of their monthly incomes on rent that they will struggle to put away any savings for a down payment, even if they want to take advantage of the current affordability of buying a home.
Copyright © 2015 usihomes.com
Price Gap Breaks Open Between New and Existing Homes
By Robert Johnson, CFA
The gap is the widest in history as limited builder lots and a focus on higher-end homes has pushed up new-home prices. This week’s chart shows the median price of a home, one for new homes and another one for existing homes.
If you look at the graph, you can see in the early 2000s that a new home price was always more, but not that much more, than an existing home price. There was very little penalty for going out and buying a brand new home. But since the recession, things have really changed. The gap is the widest it’s been in history. In fact, a median new home price is $280,000 versus something like $205,000 for an existing home–a huge gap.
That gap has several causes. One is that builders haven’t got that many lots right now, because they shut down buying more lots when the recession hit and they focused on maximizing profits on existing lots and on higher-priced homes, not leaving much for the low end of the market. Also, the price of raw materials that go into a home, including labor, have begun to rise, making the cost of building a home go up as well. So now we have this very wide gap.
I think that gap will need to close; we really want to get the new home market going again. What will make that happen? I think builders will have to set up more developments and focus more on lower-priced homes before we’ll see the new-home market really explode yet again.
November 2014 …
Borrowers’ access to mortgage credit is the greatest in at least three years, and standards may continue to loosen from stringent post-crisis criteria as banks adjust to new rules and look to pump up home-loan revenue, experts said Wednesday.
A gauge that tracks mortgage-credit availability ticked up to 114 in March — the highest reading in the series’s three-year history — from 113.5 in the prior month, according to the Mortgage Bankers Association. For context, MBA set the gauge to equal 100 in March 2012.
Despite recent gains, March’s credit-gauge reading is far below MBA’s estimate for a level of about 800 in 2007.
“I don’t think there’s any question that mortgage underwriting has gotten easier or is looser than it was two or three years ago, but it’s nowhere near where it was in 2005, 2006,” said Guy Cecala, publisher of the trade publication Inside Mortgage Finance. “We are talking about easing from extremely tight underwriting standards.”
Of note, not all buyers are equally benefiting from greater mortgage-credit availability. Many lenders are increasingly providing credit to borrowers who want jumbo loans. Jumbo loans are for greater amounts than the maximum that can be backed by federally controlled mortgage-giants Fannie Mae FNMA and Freddie Mac FMCC . It’s typically tougher to qualify for jumbos than other mortgages.
“Lenders are likely moving to create a broader range of jumbo products in order to capture the increasing demand for such financing in the market,” according to MBA.
It’s clear that buyers of greater means are having an easier time in this housing market. Annual sales of existing single-family homes between $500,000 and $750,000 recently rose 6.4%, while sales of homes that cost between $750,000 and $1 million rose 13%, according to the National Association of Realtors. Meanwhile, annual sales for properties up to $250,000, which make up the lion’s share of the market, dropped more than 7%.
An increase in mortgage-credit availability comes at an opportune time for a housing market that has suffered from an unusually harsh winter and rising mortgage rates. Some buyers are acclimating to the new pricier housing environment, which has seen rates rising since May and prices running higher. In February, applications for loans to purchase a home were down as much as 30% from a May peak, but that gap narrowed in recent weeks, and now the gauge is down 18% from May, according to MBA.
There’s been concern that new mortgage rules for lenders and borrowers in 2014 would cut credit access, especially for lower-income borrowers. Indeed, this year’s annual real-estate-lending report from the American Bankers Association showed that 80% of respondents expect new regulations to “have a measurable reduction in credit availability.” However, Bob Davis, an executive vice president at ABA, said standards may thaw once lenders become more comfortable with new rules.
“There will be a tendency for some liberalization over the course of the year,” Davis said.
Data signal that certain banks have already somewhat loosened standards. According to the Federal Reserve’s senior loan officer survey, 16.7% of large banks recently eased credit standards for prime purchase mortgages, while 5.6% tightened, and the rest left standards unchanged. Banks, which saw refinancing applications plunge last year as rates rose, are looking to make up that revenue elsewhere.
Follow Ruth on Twitter @RuthMantell
Is renting or buying a better financial bet? Every six months, Trulia’s chief economist Jed Kolko runs the numbers to answer that question and help you stay on top of the trends. So what does Trulia’s Winter 2014 Rent vs. Buy Report tell us? Although the gap between renting and buying is narrowing across the U.S., homeownership is still 38% cheaper than renting.
Homeownership remains cheaper than renting nationally and in all of the 100 largest metro areas according to Trulia TRLA -3.42%’s latest Winter Rent vs. Buy report. Rising mortgage rates and home prices have narrowed the gap over the past year, though rates have recently dropped and price gains are slowing. Now, at a 30-year fixed rate of 4.5%, buying is 38% cheaper than renting nationally, versus being 44% cheaper one year ago.
The rent versus buy math is different in each local market. Buying ranges from being just 5% cheaper than renting in Honolulu to being 66% cheaper than renting in Detroit. But even for a specific market, the cost of buying versus renting depends on how much home prices rise (or fall) after you buy. Our model assumes conservative home price appreciation, but – as we all know after the last decade – home prices can unexpectedly rocket or plummet.
Even though prices increased sharply in many markets over the past year, low mortgage rates have kept homeownership from becoming more expensive than renting. Also, in some markets, like San Francisco and Seattle, rents have risen sharply; rising rents hurt affordability relative to incomes, but rising rents make buying look cheaper in comparison.
Will renting become cheaper than buying soon? Some markets might tip in favor of renting this year as prices continue to rise faster than rents and if – as most economists expect – mortgage rates rise, due both to the strengthening economy and Fed tapering. For each metro, we identified the mortgage rate “tipping point” at which renting becomes cheaper than buying, given current prices and rents. If rates rise, Honolulu would become the first metro to tip, at a mortgage rate of 5.0%. San Jose and San Francisco would also tip before rates reach 6%. But those are the extreme markets. Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying – and rates haven’t been that high since 1989.
Copyright © 2014 forbes.com
The new year brings new challenges for those who want to buy or sell homes in the Phoenix area. Do you know what to expect? The Arizona Republic and the ASU Real Estate Council at the W. P. Carey School of Business are hosting an event to help you find out what’s happening out there.
“Phoenix Housing Market Explained II” is slated for Saturday, Jan. 25, at ASU’s Tempe campus. The event will be similar to one held last spring, and it will feature an overview of the local housing market, including trends like employment and population growth, that can affect the housing industry. The experts will also answer submitted questions from the audience.
The speakers – all experts frequently quoted in the media – will be:
• Catherine Reagor, senior real estate reporter for The Arizona Republic
• Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business
• Mark Stapp, director of the Master of Real Estate Development (MRED) program at the W. P. Carey School of Business
“This is a chance for those thinking about buying or selling homes in the Phoenix area to hear about current price trends and other developments that may affect them,” explains Reagor.
The event will be held in the Business Administration C-Wing Building, or BAC, at 400 E. Lemon St. on ASU’s Tempe campus. Registration starts at 9:30 a.m., followed by the presentations and discussion from 10 to 11:30 a.m. The cost is $25 per person, with a $10-off discount available for subscribers to The Arizona Republic and ASU students and alums.
Parking is available just across the street at the intersection of Apache Boulevard and Normal Avenue. Signage will direct participants from the garage to room BAC 316 on the third floor of the BAC building.
Space is limited, and you can register at tickets.azcentral.com. More information about the event can be found at www.money.azcentral.com, www.wpcarey.asu.edu or by calling 602-444-4931.
More information on the Valley housing market is also available in the W. P. Carey School’s monthly reports at www.wpcarey.asu.edu/realtyreports.
Debbie Freeman, Debbie.Freeman@asu.edu
Communications Manager, W. P. Carey School of Business
Copyright © 2010 Arizona Board of Regents
With several major multi-use projects currently in development, the City of Tempe is in the midst of a commercial real estate boom. While it would be easy to heap all the praise for this market resurgence — and the jobs it has brought with it — on Tempe Mayor Mark Mitchell, he would be the first one to spread the gratitude around.
“The recent success is not by accident,” says Mitchell, who was elected mayor in 2012 and has served on the City Council since 2000. “This has taken years of dedication and commitment from the council and employees of the city to attract economic development to the city. We’re seeing the investment that we’ve made in our community attract many opportunities.”
The city is proving to be a major player when it comes to attracting businesses. Many nationally-recognizable companies already have a presence in Tempe, including LifeLock, KPMG, Bank of America, Edward Jones and Medtronic. Additionally, GoDaddy currently has facilities under construction.
“The City of Tempe has done a wonderful job of promoting growth over the past several years,” says Glenn Smigiel, Senior Vice President at CBRE. “Their willingness to work with tenants and developers, demonstrated by a streamlined process for facilitating new projects, has been instrumental in bringing in a wide range of new companies to the market.”
Smigiel recently facilitated the $38.5 million sale of Centerpoint on Mill. The 127,027 square-foot mixed-use commercial project on the corner of Mill Avenue and University Drive was created through a unique public-private partnership between the City of Tempe and developer DMB.
Rather than draw attention to his tenure as mayor, which has seen Tempe add over 5,000 jobs since July 2012, Mitchell chooses to direct praise at current and former city council members, Tempe citizens, real estate professionals and city staff. Each group, according to Mitchell, continues to play an integral role in promoting Tempe as an economic hub in the Valley.
Mitchell points to successful rezoning and redevelopment deals of the past, like Tempe Marketplace and the revitalization of Mill Avenue, as evidence of what smart planning can accomplish. He also emphasizes Tempe’s plethora of qualities that are attractive to businesses, such as its engaged and educated citizenry, central location, proximity to higher education and the willingness of its leadership to work with business leaders to drive economic progress.
Tempe has several major multiuse projects currently in development, including Marina Heights and a third tower at Hayden Ferry Lakeside adjacent to Tempe Town Lake and Liberty Center at Rio Salado.
“To date, we have had $1.4 billion invested in and around the lake,” says Mitchell.
The Marina Heights project, which already secured State Farm as tenant, accounts for a bulk of that investment.
The design of Marina Heights takes its inspiration from the Salt River and the watershed, says Mike Davis, whose firm DAVIS designed the building. “We designed the complex around a plaza that takes its cue from the way the water starts up in the mountains and then runs down to provide for agriculture and other things that helped the city develop.”
DAVIS designed the building with light colored, reflective glass that will pick up the colors of the sky and fit well into the environment of the area.
Each project represents a facet of the city’s vision for development within its boundaries. Included in this vision is a heavy focus on the creation of state-of-the-art multiuse properties that can attract local and national businesses to the city. In order to realize that vision, the city has worked collaboratively with brokers, developers and other partners.
“We are honored to be affiliated with the developers who create job opportunities and change the face of our community through innovation,” says Cheri Brady, Vice President National and Commercial Sales for First American Title Insurance Company, who provided many of the title products and escrow services for many of the new projects in Tempe.
Hayden Ferry Lakeside, which currently features two completed phases with a third under construction, is operating at nearly max capacity, making the lakefront in Tempe one of the hottest destinations for business. Parkway Properties acquired Hayden Ferry I and II last year.
In the seven months following the acquisitions, Parkway nearly doubled the occupancy in Hayden Ferry I and brought Hayden Ferry II to 100 percent occupancy, says Parkway Properties Vice President and Managing Director Matthew Mooney.
Mooney attributes this success to Parkway’s proactive management of the property and Tempe’s status as a go-to locale for businesses. “We feel like there is somewhat of a shift happening,” Mooney says. “If you look at the recovery that’s happened here, the numbers are in Tempe’s favor.”
Just as ambitious is Liberty Property Trust’s Liberty Center at Rio Salado, which will offer a sustainable, mixed use property on over 100 acres with business, industrial, retail, restaurant and hotel space. The sizable site is being developed, in part, to meet the City of Tempe’s stated need for mixed use space. The demand is there and Liberty Property Trust has developed the site with the needs of the city in mind, according to John DiVall, Senior Vice President and City Manager for Liberty Property Trust’s Arizona region.
Mitchell and the City Council have worked with brokers, land developers and businesses to make Tempe an attractive site for economic growth, and the Mayor points to these public-private partnerships as a key factor in promoting that growth. “Whatever the market bears, we are going to figure out how we can work with that,” he says. “Because at the end of the day, it doesn’t do the city any good if those projects aren’t successful. So it’s in everybody’s best interest for us to work together, because our community will benefit from that.”
Just down the road from the lake, another aspect of Tempe’s vibrant economy is spurring real estate growth through public-private partnership. With its sunny weather and central location, Tempe has a chance to further solidify its stance as a prime tourism destination in the Valley. In order to capitalize on this, city leaders have long sought to develop a conference center and attract a top-tier hotel to the downtown area, according to Mitchell. That vision is now coming to fruition with USA Place.
Mitchell has a tourism background, having worked in the industry after college, and understands what the industry can mean to a community. “I’m a big believer in tourism,” he says. “The number one industry in our state is technology and the second is tourism.”
But the site will function as much more than a conference center and hotel. USA Place will also serve as the national headquarters for USA Basketball, complete with a 4,500 seat arena.
USA Place fits into a larger vision for the future of Tempe, says Mitchell. By drawing in more out of state visitors through the conference center, hotel and basketball center, Tempe is giving itself a chance to attract more businesses to the city by showing off what a great locale it is.
Mitchell points to opportunities for collaboration between the forthcoming conference center and the different colleges at ASU and how that can positively affect the city. “Imagine if there is a conference center and someone from the Biodesign Institute comes for a 1,000 person conference, and we do a quick tour of downtown to show what we have to offer,” he says. “They see that they can open up a regional division for western states in Tempe and it’s easy to fly here because our proximity to the airport is phenomenal.”
To support his claims, Mitchell points to the positive effect the Fiesta Bowl had on Tempe in the past. He recalls a game in the 1980s when officials from Chase made the trip to watch the game. “The City of Tempe and DMB Associates used the opportunity to show Tempe off to Chase leadership and eventually convinced the company to move into the Centerpoint building on Mill Avenue. The partnership worked out well for the city, bringing about 2,600 jobs and the largest credit processing center west of the Mississippi River.”
“Centerpoint on Mill was originally conceived and master planned by DMB in a unique public-private partnership that spanned 28 years and was the impetus for redevelopment of the Mill Avenue District and downtown Tempe,” says Michael Burke, DMB’s Vice President of Development. “DMB’s flexible entitlements and its strong partnership with the City of Tempe allowed Centerpoint on Mill to be responsive to changes in the market and to meet the needs of its retailers and customers.”
The Mayor and City Council have also remained committed to looking at rezoning options for properties when appropriate and when brought up by the property owner. This allows the city to continually revitalize itself by rezoning properties for multiple uses that appeal to modern tenants.
This type of infill development is a necessity in Tempe because the city is landlocked and cannot expand outward. Rather than view that as a detriment, however, the city has been proactive in using its unique characteristics to develop unique projects and offer developers multiple options as they develop property.
“The one thing about Tempe that is noteworthy to me is it is the only landlocked city,” says Mooney. “As a government, they take a different approach than all of the other cities because they know the one thing they don’t have more of is land. And so they are just much more amenable to urban development and taking a different approach to development than a lot of the other cities, somewhat by necessity.”
Rezoning has helped Tempe aggressively pursue technology companies and fashion itself as a hub for the tech industry in Arizona. “Technology is the leading industry in our state,” says Mitchell. “We have the highest percentage of tech-related businesses out of any city in the Valley at over 20 percent.”
One promising project aimed at the tech industry is Discovery Business Campus, Wentworth Property Company’s forthcoming state-of-the-art complex near Elliot Road and the Loop 101 Freeway, or what Mitchell dubs “the Price Technology Corridor.” The new project integrates the sites previous owner, Freescale, and allows for further development of vacant lands at the site.
The completed plan at Discovery calls for the campus to include facilities for industrial, office, retail and hotel space. With its variety of uses, the site will be a complementary addition to the technology corridor, which already includes the ASU Research Park, the site of the new GoDaddy facility.
In order to house all of the employees that come with the economic boom, Tempe has fostered a progressive multifamily housing atmosphere to provide modern living arrangements for the large amounts of upwardly mobile young professionals the city is attracting from technology and other industries.
Companies like GoDaddy, State Farm and Allstate bring jobs to Tempe and, with that, a need for housing. “There is an opportunity here, because it offers something for people who want to live in Tempe but don’t want a house or a mortgage payment,” says Mitchell.
With the influx of demand, developers are responding. In addition to properties like USA Place that will feature residential, other communities are popping up around the city. Mark Taylor is currently developing a multifamily offering at Elliot Road and the Interstate 10, near the technology corridor. Additionally, there are already new multifamily offerings in the works for downtown Tempe and near the lake.
“There is a another area called Fountainhead Corporate Center near Priest Drive and Broadway Road that was a huge redevelopment area in the past. The property owner is looking at redeveloping that area to include residential units and multifamily,” says Mitchell.
Just like the mayors and councils of the past, the current leaders in Tempe are dedicated to assuring the city has a positive plan for the future. As a father to two daughters, Mitchell hopes to leave them a thriving community with a bright outlook. “I want my daughters to experience what I had in Tempe, but even better.”
The city is on the right track. Just a few years ago, Tempe had a $17 million transit fund deficit and had to cut $33 million from its budget, but, due to the work of the councils and mayors overseeing those problems, there is now a $5 million surplus in the transit fund and the city is budgeting smartly. The city’s leadership is now focused on responsible development and growth.
In order to make that growth happen, they are making sure to focus on the details that make Tempe an attractive destination for businesses.“All the stuff that is not sexy like infrastructure is important,” Mitchell says. “To attract companies, we need to make sure we have the proper infrastructure in place.”
Additionally, the city plans to continue rezoning and redeveloping old sites when appropriate in order to provide room for new businesses to come in and thrive. As an infill community with a finite amount of space to work with, this type of planning is crucial. “We’re going to continue working with redevelopment projects and relying on our staff like we always do to help us think outside the box,” Mitchell says.
Tempe is primed to take advantage of its recent economic successes and parlay them into future stability. With multiple high-profile developments set to see completion in the next few years, Tempe has the sound planning and leadership to achieve sustained, positive growth.
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