Welcome to the October 2024 edition of Arizona Ascent! This month, we're diving into some timely and crucial topics reshaping our great state, keeping you informed and inspired.
Many of you wonder how the Federal Reserve's recent actions will affect mortgage rates. The Fed met on September 18, 2024, and while their decisions impact various sectors of the economy, the mortgage market has unique dynamics.
Buying a home is one of the most significant financial decisions you'll ever make, and it can feel incredibly daunting in Arizona's current housing market.
The process can seem overwhelming with fluctuating interest rates, limited inventory, rising inflation, and industry changes. That's why having a REALTOR® by your side is crucial to navigating this critical decision.
Since the pandemic, rent in the Valley has skyrocketed, making affordable housing feel like a distant dream. Even though rents are starting to level off from their peak, finding affordable living spaces remains a significant challenge for many Arizonans. We'll take a closer look at the current state of our housing market, legislative efforts to address the crisis, and what the future might hold for Phoenix.
We invite you to actively participate as we journey through these stories that shape Arizona's narrative participate actively. Your thoughts, questions, and topic suggestions aren't just welcome—they're integral to shaping the content of Arizona Ascent. Your contribution is what makes this community thrive. Let's cocreate this newsletter together.
Buying a home is one of the most important financial transactions you will make, and it can be daunting, especially in Arizona's current housing market. The process can seem overwhelming with fluctuating interest rates, limited inventory, rising inflation, and industry changes. That's why having a REALTOR® by your side is crucial to making one of life's most important decisions.
TheEssentialRoleofaREALTOR®
As a REALTOR®, I'm privileged to be your trusted advisor throughout homebuying. From our first consultation to negotiating the deal and ensuring a successful close of escrow, we provide the knowledge and expertise you need. We offer unbiased and up-to-date market data to help you make informed decisions.
By leveraging local market knowledge, your REALTOR® can provide valuable insights into Arizona's housing market, including property values, market conditions, and more. We also advise on community amenities, school districts, local businesses, and other factors to help you choose the perfect home for your needs.
Navigatingthe Market
REALTORS® are essential links during the homebuying journey. They coordinate with lenders, inspectors, appraisers, title companies, and other professionals. Our established relationships with dependable partners save you time and stress
As skilled negotiators, REALTORS® work to ensure you get the best financial deal possible. Our goal is to secure a fair and equitable price while handling the complexities of the transaction.
ManagingthePaperwork
Paperwork can be overwhelming, but it's a critical component of the homebuying process. Numerous forms must be reviewed and signed, from your purchase agreement and pre-approval letter to inspection and appraisal reports. REALTORS® manages these documents for you, spotting issues before they escalate and ensuring all paperwork is completed correctly and on time.
CommitmenttoEthicalStandards
Every REALTOR® is committed to upholding a strict ethical code as a member of The National Association of REALTORS®. This means we prioritize our clients' best interests and guarantee honest, transparent, professional service throughout home buying.
AdaptingtoIndustryChanges
The home-buying process will continue to evolve, but Arizona REALTORS® is prepared to adapt to these changes and effectively meet your needs. We stay ahead of industry practices while maintaining the foundational principles of our profession. Having an experienced and ethical professional by your side ensures informed decisions and smoother transactions.
Mid-MonthPricingUpdate
Understanding the market is critical to making informed decisions. Each month, we analyze how pricing has behaved and forecast future trends. For the period ending September 15, we recorded an average sales price per square foot (SF) of $294.34, up 4.6% from $281.50 in August. Our forecast mid-point was $288.56, and the actual result exceeded our expectations.
The last few months have seen significant volatility in price per square foot due to lower completion counts, but median sales prices have remained stable. Anyone alarmed by the previous month's 4.2% drop should be relieved by the 4.6% rebound. Prices typically dip in the third quarter before recovering from September onwards, and 2024 followed this pattern more dramatically than usual.
On September 15, pending listings averaged $326.35 per SF, down 0.6% from August 15. This suggests prices will stabilize between now and October, with fewer wild swings. Foreclosure activity remains low, but pre-foreclosures are on the rise.
Our forecast for October 15 predicts an average sales price of $292.55 per SF, a slight 0.6% decrease from September. We are 90% confident that prices will fall within ±2% of this midpoint, i.e., between $286.70 and $298.40.
Understanding these market trends is essential, but having a REALTOR® ensures you have the support and guidance needed to navigate these changes.
Since the pandemic, rent in the Valley has skyrocketed, making affordable housing seem like an elusive dream. Even as rents begin to level off from their peak, the struggle to find affordable living spaces remains a significant challenge for many Arizonans. Let's examine the current state of our housing market, legislative efforts to address the crisis, and what the future might hold for Phoenix's housing landscape.
TheMultifamilyMarketinPhoenix
If you're wondering about the multifamily market in Phoenix, it's currently sitting at about 92% occupancy, a notable drop from nearly 98% in the immediate post-COVID period. This decline is mainly due to a surge in new multifamily units finally hitting the market. After the 2008 recession, new construction came to a halt, but in recent years, we've seen a return to more typical building levels, which is great news for renters as it means more competition and slightly lower rents.
WhyAreRents Dropping?
The primary reason for the recent drop in rents is the influx of new construction. As more multifamily units become available, occupancy rates decrease, leading to more competitive pricing. Advocates for new construction have long argued that building more units across all price points is crucial for keeping rents manageable and affordable.
WhyAffordableHousingMatters
Affordable housing is a critical issue here in Arizona. We've long been seen as a cheap state, but maintaining that reputation is becoming increasingly difficult. Rising land costs, limited properties zoned for multifamily use, and lengthy entitlement and construction processes contribute to the affordability crisis. Everything involved in developing and managing apartment communities has increased in cost, mirroring the inflation that has affected household budgets.
RoadblockstoNewConstruction
One of the biggest obstacles to new construction is the need for more multifamily-zoned land. Much of it has been developed or is currently in the construction pipeline. The "Not In My Backyard" (NIMBY) movement also plays a significant role, often opposing multifamily projects over concerns about crime, traffic, and school crowding—concerns that studies have repeatedly shown to be unfounded. This opposition can significantly slow down the entitlement process, which now takes two to four years compared to the previous six to twelve months.
TheExtendedEntitlementProcess
The extended entitlement process results from various factors, including inadequate municipal staffing and substantial NIMBY opposition. More meetings and negotiations between neighborhoods and developers mean more delays. Most new projects require rezoning or entitlement, providing NIMBYs with ample opportunities to stall construction further.
ExploringLegislativeSolutions
Legislative solutions are being explored to tackle these challenges. For instance, House Bill 2297 allows converting commercial buildings to multifamily units, potentially adding 150,000 units without rezoning or entitlements. This bill aims to utilize underutilized or blighted commercial properties for housing.
Similarly, Senate Bill 1162 mandates cities to conduct housing needs studies, examining current and anticipated population growth and housing shortages. To streamline the process, it also requires rezoning applications to be decided within 180 days.
TheLegislature'sRole
While planning and zoning are local issues, the state legislature has stepped in to address the affordability crisis. Recent bills aim to create consistency between cities and proactively address housing needs. The legislature's involvement reflects growing frustration with municipal inaction and a desire for broader solutions.
EvictionRatesandMediaPerception
Yes, eviction rates have risen in the Valley, but it's essential to understand the context. Arizona's growing population naturally leads to higher eviction filings, but eviction rates have decreased on a per capita basis. Media reports often conflate filings with actual evictions, overlooking the nuance that not all filings result in tenants being evicted.
LuxuryApartmentsvs.WorkforceHousing
While more apartments are being built, many fall into the luxury category due to high development costs and regulatory hurdles. Building middle-income housing is challenging, as planning and zoning commissions often require developers to include costly amenities, making it difficult to create affordable units.
Many Arizonans are curious about how the Federal Reserve's recent actions will impact mortgage rates. The Fed convened on September 18, 2024, and while its decision to adjust the federal funds rate does influence various sectors of the economy, the mortgage market has its own unique dynamics.
AnticipationofRateCuts
The market had already anticipated the Fed's half-percent cut, leading to a gradual decrease in mortgage rates even before the official announcement. This proactive response highlights how financial markets—including mortgage rates—often react in advance to expected changes, particularly during uncertain economic times.
RecentTrendsinMortgageRates
Mortgage rates have been higher for the past couple of years, especially compared to the historic lows observed during the COVID-19 pandemic. In 2020 and 2021, 30-year fixed-rate mortgages dipped below 3% as the pandemic prompted lockdowns. However, these rates climbed to nearly 8% last year due to a robust economy and rising inflation.
The good news? The prospect of rate cuts has already started to lower mortgage rates. Long-term fixed-rate mortgages are averaging around 6.2%, marking the lowest levels since February 2023. It's important to remember that various factors influence mortgage rates, including overall economic conditions and the Federal Reserve's decisions.
FactorsAffectingMortgageRates
When the Fed adjusts its interest rates, the most immediate effects are felt in short-term and adjustable-rate loans, such as Home Equity Lines of Credit (HELOCs) or Adjustable-Rate Mortgages (ARMs). Fixed-rate mortgages, on the other hand, are more closely tied to long-term economic indicators like the bond market.
Understanding the nuances of mortgage rates requires attention to the broader economic context. The reasons behind the Fed's decision—whether to control inflation, stimulate economic growth, or address unemployment— will influence how mortgage rates respond moving forward.
ExpertInsights
We spoke with Kayla Kallander, Assistant Vice President and Mortgage Lender at First International Bank and Trust, to shed light on this. Kayla emphasized the importance of individualized mortgage advice:
Kayla's insight is especially pertinent in today's market, where a one-size-fitsall approach to mortgage rates won't suffice. Although rates may trend downward, each borrower's unique circumstances—such as credit scores, loan amounts, and financial objectives—will determine the best mortgage options.
LookingAhead
As we look to the future, it's vital to remember that economic conditions and market expectations influence mortgage rates. While the Fed's actions provide valuable signals, they don't directly dictate fixed-rate mortgages. The market tends to anticipate these moves, as evidenced by the recent adjustments in September.
For those considering home purchases or refinancing, now could be an ideal time to consult a trusted mortgage advisor. With the ever-changing economic landscape, having a tailored plan that reflects your financial goals is essential for navigating today's mortgage market.
On September 9, 2024, Chandler's City Council held an insightful work session focused on the city's ongoing efforts to boost residential housing development and adapt to new state housing laws. As Arizona continues to grow, Chandler is emerging as a critical player, boasting impressive housing statistics and ambitious plans for the future.
Since January 2020, Chandler has welcomed 2,287 single-family homes and 3,082 multi-family units into the community. With another 121 single-family homes and 1,138 multi-family units currently under construction, the city is committed to meeting the housing demands of its growing population.
However, challenges still linger. The Council revealed that 16 residential projects, some dating back to 2016, have been approved but have yet to be built. These projects can add 129 single-family homes and 2,149 multi-family units. Developers have cited financing difficulties, rising material costs, and varying rental market demand as hurdles impacting their completion timelines.
Chandler's development strategy is centered on its Planned Area Development (PAD) zoning process, which has existed since the 1980s. This system allows for density bonuses and mixed-use integration, fostering diverse housing developments that cater to the community's various needs.
The Council highlighted recent policy changes designed to enhance these efforts. The updated Infill Incentive Program, launched in November 2023, provides financial tools to revitalize underutilized retail and office spaces, promoting mixed-use projects in areas north of the Loop 202 freeway.
Chandler is also making strides in addressing affordable housing needs. The city is modernizing its public housing units and has partnered with Gorman & Company to build a new 157-unit multi-family development. Plans are in place for two additional public housing sites east of Downtown Chandler, with one site's development agreement set for City Council approval this fall and proposals for the second site expected by the end of the year.
Currently, Chandler administers 363 public housing rentals and 563 housing choice vouchers, while nonprofit organizations manage an additional 102 affordable housing properties in the area. These collective efforts underscore Chandler's commitment to creating a diverse and accessible housing market.
The City Council is preparing to comply with new housing-related state laws taking effect in 2025. Upcoming ordinances will allow accessible dwelling units by right, establish criteria for multi-family uses in commercial buildings, and streamline zoning application timelines—all while ensuring that homeowners' associations continue to govern their respective neighborhoods.
This fall, Chandler will kick off a comprehensive assessment of its housing needs, focusing on affordable, workforce, and market-rate options. This year-long study aims to create a comprehensive housing plan that could guide the General Plan Update for Chandler, which voters will consider in 2026.
As the housing market continues to fluctuate, August has proven to be a big month for the Phoenix area. According to the latest data from the August RE/MAX National Housing Report, Phoenix is topping a few key benchmarks including new home listings growth, declining closed home sales, increased inventory, and an overall balancing of market conditions. To help navigate and understand these shifts, here’s a breakdown of key trends to watch.
BiggestIncreaseinNewListings
Phoenix has set a record with the largest year-over-year increase in new home listings, showing an impressive +25.0% surge from August 2023. This notable rise marks a significant shift in market dynamics, creating a more favorable market for prospective buyers. However, the influx of new listings means a more competitive environment for sellers and more room for price negotiation from buyers.
DeclineinClosedHomeSales
Phoenix has reported the second-largest year-over-year decline in closed home sales, experiencing a drop of -10.1%. This downturn mirrors broader market trends but has also created speculation on the market's resilience. Despite the dip in completed sales, the steady flow of new listings is an indicator the market may be balancing out as time progresses.
HomePricesandOverallMarketContinuetoStabilize
The median sales price in Phoenix is now sitting at $440,000, reflecting a 1.1% decrease from July but a 3.5% increase from August 2023 numbers. This trend reflects a complex, yet steady price structure in the area. Notably, the median sales price has been consistently higher year-over-year for the past 14 months, demonstrating a trend towards long-term stability.
InventoryContinuestoGrow
Inventory levels in Phoenix have experienced growth for the sixth consecutive month, improving by 2.4% since July and a substantial 37.6% rise from August 2023.
This increase brings buyers a broader range of options and supporting a more balanced market environment. The months’ supply of inventory stands at 2.4, up from 1.7 in August 2023, suggesting a transition towards market equilibrium.
Since 1980, the city has
MarketShiftsTowardsaBuyerAdvantage
Industry leaders are taking note of Phoenix's evolving market. Amy Lessinger, President of RE/MAX, LLC, states, "The robust increase in listings coupled with strategic price adjustments is a testament to the market's adaptability and resilience during dynamic economic times."
ExpertsArePositiveAboutthePhoenixMarket
The current market dynamics in Phoenix increasingly favor buyers, as the surge in new listings provides significant negotiation leverage. More choices mean buyers can walk away from unfavorable deals with confidence that something else on the market will meet their needs. On average, buyers are securing homes at 99% of the asking price, indicating a strong market with some room for flexibility.
TheBottomLine
As the market gains momentum in favor of buyers, alongside lowering interest rates, buyers will find themselves in a much stronger position to find excellent home opportunities with the ability to negotiate.
BUSINESSSPOTLIGHT:
NaimCheeseboro’sEcoFriendly,SplashBinJourney
By Ava La Monica, Editor
Image SoUrce for Article
By: Naim Cheeseboro of Splash Bins
In our latest October Business Spotlight, we had the privilege of interviewing Naim Cheeseboro, CEO of the company Splash Bins. Cheeseboro was formally noted for his success in high school and college football. His leadership and determination skills drove him to take charge of his future with a business of his own. This led him to launch Splash Bins, a locally owned and operated trash bin cleaning service focused on addressing a problem many Arizona residents face—dirty, smelly trash bins that worsen in the desert heat.
The idea for Splash Bins was born out of Cheeseboro's own frustrations as a homeowner in Arizona stating that, “Heat amplifies smells from the trash, and with bins stored in garages or backyards, it’s easy for foul odors to spread.”
He also mentions that, “Dirty trash bins can attract bugs and other pests” - something that no homeowner wants to experience.
Cheeseboro saw that traditional methods of cleaning trash bins often involved harsh chemicals, which were not environmentally friendly. As a result, Cheeseboro decided to offer a better solution: his company uses water heated to 250 degrees to thoroughly clean bins, killing bacteria without the use of chemicals, while also recycling water to reduce waste. This environmentally conscious approach became one of the key selling points of Splash Bins.
Despite balancing the demands of a full-time job and the rigors of starting a new business, Cheeseboro remained committed to growing his company.
He encountered the typical challenges many entrepreneurs face, from managing his time to investing in the business and building a solid customer base. His dedication to solving a common household problem and improving people’s lives helped him push through. When asked about his biggest challenge of running a small business, Cheeseboro responded that the goal is to, “Keep building, one customer at a time, and see where it leads.”
Cheeseboro recommends that monthly or quarterly cleanings provide the most efficient long-term results for keeping trash bins clean. However, sometimes one deep clean is all that’s necessary. Looking to the future, Cheeseboro is focused on continuing to grow his business and provide an environmentally friendly solution to trash bin cleaning for a wider range of customers such as those in commercial and industrial markets.
Cheeseboro also prides Splash Bins for their power washing services, which are a huge asset to public spaces in the communities of Arizona. The unique thing about Cheeseboro’s power washing services is that they also filter and recycle the water used, trapping oil and any other contaminants.
Cheeseboro admits that while trash bin cleaning is not “the most glamorous job” it plays a major role in the cleanliness of Arizona communities and HOAS. Splash Bins serves residents in the cities of Avondale, Glendale, Goodyear, Litchfield Park, Phoenix, Scottsdale, Surprise, and Tolleson. If you’re looking for an eco-friendly solution to clean and sanitize your trash bins, Splash Bins might just be the company for you!
Nominations Open for 2025 Maricopa Small Business Impact Awards
Nominations are now open for the inaugural 2025 Small Business Impact Awards, recognizing the top upcoming and influential small businesses in Maricopa County. These awards honor the innovation, growth, and community impact of local entrepreneurs who are shaping the future of the country's economy. The nomination deadline is December 21, 2024.
Arizona Ascent Magazine will highlight the exceptional small businesses launched or significantly grown in the past year and the visionary founders and teams behind them in our March/April issue. This celebration of entrepreneurial spirit will be a feature within the magazine, recognizing those who are making a difference in the local business community.
Aboutthe2025SmallBusinessImpactAwards
The Small Business Impact Awards celebrate the achievements of Maricopa County's most promising small businesses. These awards highlight businesses that demonstrate significant growth, innovative practices, and positive contributions to their communities. Nominations can be made online here.
All nominations will be reviewed by a selection committee comprised of business leaders, community stakeholders, and the Arizona Ascent editorial team. To be considered, the 2025 Small Business Impact Awards nomination forms must be submitted by December 21, 2024. Eligible businesses must have been established or significantly grown between January 1, 2024, and December 31, 2024. The committee will determine winners from the nominations submitted by the deadline. Please email info@arizonaascent.comwith any questions.
