Source: Mark Stapp, W. P. Carey School of Business
As job numbers and consumer spending begin to rise, the real estate market is also starting to recover. But will we see a repeat of massive growth, skyrocketing prices and cookie-cutter homes? One expert from the W. P. Carey School of Business at Arizona State University analyzes likely future trends.
“We have a lot of people looking at the same real estate data and making decisions at the same time,” explains Mark Stapp, the Fred E. Taylor Professor in Real Estate and director of the Master of Real Estate Development (MRED) program at the W. P. Carey School of Business. “This is how markets wind up with overbuilding and speculation, but I’m actually hopeful that won’t happen in the Phoenix metro area this time. After the recent bust, real estate professionals are paying more attention to differentiating projects and focusing more on users’ wants and values. Also, lenders are enforcing more discipline.”
“We’re watching the development of new luxury apartments that are big enough to comfortably house families,” says Stapp, who is both a real estate developer and who teaches real estate to mid-level professionals. “Many former homeowners have either decided to get out of the single-family home market because of their recent experiences, or they simply can’t buy another home because of credit issues. Renting may be their best alternative.”
In addition, Stapp says it’s tough to get many existing homeowners to sell their houses with prices still down from the peak; they don’t want to lose money. Therefore, developers are introducing new alternatives that might be appealing. They’re integrating more sustainable, energy- and money-saving features. They’re also trying out new designs that appeal to changing lifestyles.
On the commercial side, Stapp says office-space needs have permanently changed. Thanks to advancements in technology and more forced productivity from fewer employees, more people and equipment can now fit into the same amount of office space. Also, some older buildings just don’t have the right configuration for modern equipment, and parking may be lacking. Therefore, Stapp thinks it will take longer for this sector to recover. However, he feels industrial space is already back in pretty good shape in the Phoenix area, though the situation is fragile.
Stapp would like to see a little more regional development planning, plus a good look at the current property-tax structure. He also advocates more self-control.
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