Influences on Phoenix-area Housing Market

1. Influences on The Phoenix-area Housing Market by Mark Stapp Executive Director, Master of Real Estate Development W. P. Carey School of Business

2. what and where • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things What is the market?

3. what and where • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things What is influencing the market?

4. what and where • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things Concerns for 2015

5. what and where Investors Exit Market • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things • Consolidate • Take profits

6. what and where Lending Criteria Remains Tight • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things • It’s not just down payment, or even income… • It’s also credit scores.

7. what and where Interest Rates Rise • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things • Even a little may keep many out.

8. what and where Foreign Investors Pull Back • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things • Dollar strengthens • Economic issues in Europe/Russia remain

9. what and where Wages • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things • Job growth, but little in the way of wage growth • Low-wage earning jobs or wages that increase with inflation

10. what and where Jobs • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things • November – AZ ranked No. 12 among states • Job growth at 2.07% • Made up 60% of jobs lost in recession • Projected to add about 40,000 per year • Source: Maricopa Association of Governments

11. what and where Population Growth • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things 2011 to 2012 │41,300(16,500 HH)* 2012 to 2013 │60,200(24,080 HH)* 2013 to 2014 │63,800(25,520 HH)* Source: Maricopa Association of Governments *Based on 2.68 pphh

12. what and where Population Projections • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things 2014│4,040,100(est.) 2020│4,507,200 2030│5,359,300 2040│6,175,000 Source: Maricopa Association of Governments

13. what and where • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things Housing Demand 2014 to 2020

14. what and where • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things 796,600 new housing units (Population increase of 2,134,900/ 2.68 people per household)

15. what and where • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things 30,640 new units per year

16. what and where • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things What and where?

17. Age Make-up • Millennials are a larger cohort than their parents. • They are postponing homeownership and renting longer (good for apartments). • What are their housing preferences in the 2020s? • We’ll see further industry changes resulting from the emergence of the smaller "Generation Z." • Baby boomers – as workers and retirees – will continue to have significant impact on real estate development and investment for at least two more decades.

18. Urbanization of Our Suburbs • Immature market, but evolving • Giving life to edge cities/towns, cities that were historically nine-to-five • Suburban “downtown” transformations combining key ingredients of housing, retail, dining and walkable “nodes” • Development within the “loop” continuing to dominate in 2015

19. Technology • Smart Homes emerge – Technological disruption and consumer demand for connected place important • Technology pushes change in space use • E-commerce and crowdfunding, for example, viewed as an adaptation challenge, “omnichannel distribution” and “e-tailers” to open brick-and-mortar stores • Changes where we do things and how we do them

20. what and where • technology • Smart Homes emerge – technological disruption and consumer demand for connected places important • Technology pushing change in space use • E-commerce and crowdfunding being viewed as an adaptation challenge • “Omnichanneldistribution" and “e-tailers” to open brick-and-mortar stores – changes where and how we do things Planning for a nation with lesser household formation, fewer new consumers, and a meager number of workforce entrants

21. { arts education culture infrastructure What should we be investing in?