Whenever a big corporation lands in a city, many sectors of the economy get a powerful boost. In real estate, the influx of newly created jobs attracts a vast pool of talented professionals looking for a place to stay, which in turn leads to a spike in home renting and buying demand. Universities can have a similar effect on the real estate market, by constantly drawing in new students in need of a home to rent—or even buy, if they can afford it.
In our Expert Insight series, we devoted ourselves to unmasking the intricacies of the U.S. real estate scene by conducting a series of Q&A interviews with a selection of real estate professionals. One state at a time, we are trying to discover which factors influence the dynamics of each market.
Tempe, Ariz., Students Choose Homebuying Instead of Renting
The home of the first and largest campus of Arizona State University (ASU), Tempe, Ariz., is a college-driven economy. Benefiting from a healthy flow of students, the city’s real estate market enjoys an ascending path. However, not everything is perfect, as the market is land-locked. Our guest for today’s Expert Insight episode is Katie Walsh of The Walsh Team, who is going to tell us more on this subject.
A seasoned real estate agent working alongside her father on Tempe’s residential real estate market, Walsh has years of expertise in this field. She was active on the San Franciscan luxury homes market for a while, after which she worked for Tishman Speyer before deciding to return to her home city. Now, Walsh is going to share with us a few details regarding this market where students seem to prefer buying homes instead of renting them.
Q: How did you end up working in this field and what drew you to it?
A: After college, I ended up in media sales. After a while, I decided I wanted a bigger challenge, which meant that I needed to move on to sell airplanes, boats or houses. I opted for houses. My dad is also in the residential real estate business (since 2003), so it seemed like a good fit.
Q: What does it take to be a successful broker in this highly competitive market?
A: It’s got to be a real, full-time profession for a broker. To be successful, you have to stay on top of the inventory each and every day; you have to nurture good relationships with other agents, you have to be tenacious and creative. When you’re helping someone find a home to buy, you need to pay attention to all the small details regarding what they’re looking for and what they like.
Q: Describe your most challenging project so far. How did you deal with it?
A: Two years ago, I was the selling agent for a large home that was under-appraised by over $100,000 because there was a lack of recent sales for the appraiser to use. We were able to sell through that by showing the buyer the value of the home. Ultimately, the buyer came up with the difference in order to close the deal and get into that home. The other, daily challenges, are having hard conversations with clients about prepping their home for sale and dealing with varied clients in varied ways.
Q: Are there any investment/development clusters/submarkets in Tempe right now? Where is development focused and why?
A: Tempe is land-locked, so, short of some empty large lots, there aren’t a lot of new single-family residential real estate developments. Redevelopment is happening in many of the adjacent neighborhoods next to the Arizona State University and the Valley Metro light rail.
Q: In your opinion, what are some of the strengths of the Tempe real estate market, and what are the challenges? How do you deal with them?
A: The strength of the Tempe real estate market is a constant demand for housing. As students come to ASU, their parents purchase housing for them as an investment, opposed to renting off-campus housing. These students then graduate, and, if they wish to stay, they want to find a place in the area to upgrade to.
That leads to the challenge: there is never enough inventory between the student housing mentioned above and the families that move to Tempe for the good schools in the area. Even after their kids graduate, these families tend not to leave their established neighborhoods. Our older housing stock is now in need of renovation and updating, and the city of Tempe is a vibrant place to be, so we’re very popular. Adding to that the fact that we are land-locked, there are definitely challenges, but not insurmountable ones.
Q: How do you think the Tempe residential real estate market is faring compared to other bigger/more established markets?
A: Tempe is a very established market and we seem to be one of the hottest ones in the Valley.
Q: How is commercial real estate changing residential housing in Tempe?
A: Commercial real estate growth is helping us. Near ASU the rental units are so expensive that parents are buying homes for the students to use while they attend the university. In addition, the influx of new businesses (such as State Farm or ADP) also increases the demand for housing.
Q: Where do you think the Tempe real estate market is heading in 2018? Are there any major/exciting developments scheduled for delivery this year?
A: Tempe’s market will continue to be strong in 2018 and it’s going to get even more competitive – all the more reason to have solid relationships with other agents and a strong reputation in the industry, so that you can know about houses going on the market before they do.
Q: Is there a certain project or initiative in the works that you think will have a big impact on residential development in Tempe?
A: Once again, we are land-locked, so there isn’t much development going on in single-family real estate. However, some Boomers and Gen Y-ers are starting to downsize and want to move closer to where things are happening. They are moving to the neighborhoods near ASU and are fixing up an older home, they’re moving to luxury apartments downtown or they’re buying townhomes near downtown. They’re even investigating new options, such as the ASU’s Mirabella retirement community that’s being built near campus. It’s always exciting selling real estate scene in Tempe!
If you want to discover more about the real estate scene of some other U.S. states, you can read our Q&A interviews covering the Tallahassee, Pittsburgh, and Honolulu, markets.