Density and Development
I got a peek recently at a list of multi-family projects that are in “pre-development” or current development stages in downtown Phoenix.
It was an interesting thing to see that the list accounted for about 2,000 rental units that should be completed in downtown by the end of 2016, but only about 360 owner-occupied units, to be completed in the same time period.
There is a rough proportion of rentals to owner-occupied units that one would expect in any area, but I was surprised to see the proportion at about 6 rental units for every 1 owner-occupied unit.
There ares several dynamics here.
First, the city of Phoenix is very eager to get “rooftops” built downtown as an economic development tool. They seem to want to provide housing for rent in order to provide for the growing student population, more than they are driven by owner-occupied units.
Second, “millennials” seem to be less inclined to purchase home. After all, they saw their parents and family lose homes during the Great Recession. Who need that, right? Further, with an average of $24,000 of debt coming out of Arizona undergraduate institutions alone, these folks don’t have the borrowing capacity.
Third, we still have some properties (I’m looking at you 44 Monroe) that were once owner-occupied, but which are now rentals. Maybe they will come back to owner-occupied in the future.
I get all of this, but there is a part of me that is concerned. You don’t have to buy in to the “great American real estate” dream that your home is an investment to know that you need a good mix of owner-occupied in any community. Owning a home means that the occupants are more likely to feel a connection to the neighborhood, to get involved in block watch and neighborhood associations.
Don’t get me wrong. I don’t think that renters are too transient to care about their neighborhoods, as some do.
But, color me a little skeptical that it is a good idea over the long term to have six times as many rental units as there will be owner-occupied units downtown.
That is all. Talk among yourselves. I’d be interested to hear your thoughts.
