Phoenix' fortunes rising at the core

By Mary Jo Waits and Mark Muro
Morrison Insitute for Public Policy

Metro Phoenix just keeps bucking conventional wisdom.
Recently the Morrison Institute documented the region's surprising density and strong urban core in the report "Hits and Misses: Fast Growth in Metropolitan Phoenix." Unlike many Sun Belt locales the Valley did not seem to be "hollowing out" or wasting much land.

Now, here's more encouraging news: Over the past two years, the region's central city, Phoenix, and its once-depressed core, have been scoring some of the region's healthiest jumps in median home sale price, according to the newest data from the Maricopa County assessor.

Yes, that's right: Within a bright-red rectangle on the assessor's maps centered on the crossroads of Van Buren and Central, the median change in full cash value for residential properties exceeded 30 percent for the two years -- a jump double the median countywide appreciation of 15.4 percent.

And even faster valuation jumps lifted the diverse neighborhoods to the north and south of Van Buren near downtown and on the south side, where home values jumped 40 percent and 42 percent. Suddenly, once-troubled blocks near the heart of the core are growing in value faster than areas around the urban fringe.

What's behind this appreciation? What should we make of these signs of vitality?

No doubt interpretive caution is in order, as the central-Phoenix increases reflect very low starting values, in some cases, or relatively few numbers of observations, so that relatively little new building can make an inordinate impact. For example, the big valuation jumps in the patchy neighborhoods south of Van Buren may owe to rather modest improvements, given a residential base of only about 1,000 homes with median assessed value of just $40,000.

Nevertheless, the data seem clear and point to the gathering force of new market trends and the power of smart policy to unleash them.

On the market side, broad changes in demographics and lifestyle preferences seem to be bringing new people with new money back to the center to invest, build, renovate and bid up values.

On this front, two sub-trends may be coming together. One may be a backlash against long commutes and the growing taste among Baby Boom yuppies and young professionals for urban amenities that's driving a genuinely robust "back to the city" trend. Another may be that the region's vast Hispanic influx is likely boosting demand for affordable shelter convenient to downtown service jobs. Just this month a Brookings Institution analysis reported that the centers of many "melting pot metros" around the West (including Phoenix) are looking more "suburban" in their household composition as they gain married Latino couples with children.

At the same time, the upturn in the core suggests that consciously trying to make the center-city competitive can make a difference.

For years the city of Phoenix has labored to make room for positive market forces to boost the center. This labor has featured the systematic courting and construction of large-scale mega-investments: the Arizona Center, Bank One Ballpark, the Phoenix Public Library and Hance Park.

But equally important have been smaller-scale efforts to promote in-fill and restore what urbanist Jane Jacobs calls the "small change" of city life -- orderly and inviting streetscapes, neighborhood life and amenities.

Since 1995, a package of fee waivers and streamlined permitting procedures has sought to overcome barriers to redevelopment. Slumlords have been prosecuted if they failed to upgrade substandard units. And meanwhile, millions of dollars have been invested in supporting urban neighborhoods, where streets have been repaired, trees planted and crime chased away. Now it all may be paying off.

In the end, then, Maricopa County's surprising 2003 valuations suggest the wisdom of optimism, when it comes to cities. They say: Smart, incremental policies combined with emerging market trends can revitalize the center -- even in the Sun Belt.

Mary Jo Waits is associate director of the Morrison Institute for Public Policy at ASU, and Mark Muro is a senior research analyst there. They were co-authors of the 2000 report, "Hits and Misses: Fast Growth in Metropolitan Phoenix." The report can be viewed on the web at www.morrisoninstitute.org