There was a recent article posted in New York Resident magazine that lists Phoenix as a top 10 place to own a second home. It gives a few highlights about desert life, and pretty accurately reflects the current situation with the housing market. Here is the link to that article...
Also, on the techinical side of things, there is a question that many people in the real estate industry have been wondering about for the last several months. I don't have the answer yet, but here is the question and some more evidence that the premise of the question is valid:
If we have so much growth of population in the Valley, why is our housing market still stumbling along?
Perfectly valid question, because I wonder about it myself. Where are these people living if they aren't buying houses, and to hear it from the apartment industry, that market is cooling as well. Well, a little birdy at the DMV says that 300,000 thousand licenses were turned in for new Arizona Driver's Licenses this year through August. There were over 10,000 Californians claim AZ status alone just in August. That is not an insignificant stat, and people have to live somewhere. If we do have strong growth of population, and evidence points to the idea that we do, then where are they going? These people are not going to be staying on friends' couches forever. I am optimistic that there is a growing amount of people that are going to be in need of housing in the very near future here. It seems almost inevitable, although this idea could be offset by the following piece of analysis.
On a related note about future demand trends, and this may set off some strong feelings with some of you; this is not a political blog, so please refrain from judgement as I am only analyzing this from a real estate professional's point of view, not a sociologist. There is a lot of talk about many immigrants leaving Arizona in preparation for a new employment law coming into effect in January. I forget the nature of the law, but it boils down to it will be hard to get work if you can't prove you are legal. At least in theory. This could have the effect of lowering the population in the valley, further exacerbating the housing vacancy issue. I will make no judgements here, but it is a side effect of a tougher immigration policy, and although I don't know how much effect it will have, it could be substantial, and whether you are in favor of strict immigration control or not, this couldn't come at a worse time for the housing industry and it will cause some pain. It is a brilliant example of why you address problems like these sooner than later. We have all gotten use to higher home values and lower home maintenance costs and job growth in part because of immigration, and now we have to fix it. We have become use to the things that come with it that do benefit us, whether right or wrong, and we will be paying in various ways, including flat property values as we thin the population. I hope the expected influx of baby boomers does offset this in the coming years, as i think a vibrant real estate market is crucial to Arizona's continued success.
One last item related to new home sales. A local tracking report that I read detailed a horriffic week in new home sales. There were actually a lot of new sales for the week-maybe not a lot, but a very respectable showing, let's say. The buzzkill was the number of cancellations that came too uncomfortably close to zeroing out the sales. It was really ridiculous. There are going to be weeks like that, I suppose, and I know of at least one builder administratively through a significant number sales into cancellations probably based on the public report not being up to snuff or something like that, but still a cancellation is a cancellation, and nobody likes to see those. There is definitely some hangover regarding loans, although I have heard that is easing significantly-or maybe it was just never as bad as the media pointed out. We are going to have to watch new home sales figures very closely; as I have said, I think there is a good chance that new home sales will recover before resales, as builders have pricing power that most owners do not, and it is no competition. We are seeing subdivisions come on line starting in the $99K's as I noted in an earlier post, and that is crazy reasonable. Eventually this will drive some sales. The buyers in this category, first time homebuyers, to a large degree, were the first traumatized by the price increases of 2005, and once they realize they can afford homes again, they will lead the market back to recovery, if there is to be one.
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