Arizona has long been one of the more upwardly mobile property markets across the country. Given the shaky nature of the economy in recent years, that has come into flux with residential and commercial real estate. While the economy has been improving, there are still ominous signs that homebuilding in large areas of the state, like the Phoenix area, are going to recover slowly. Although research has indicated that the market is improving, until there is a full-fledged recovery, the retail market may remain slow and profit can be difficult to guarantee.
A forecast stating that 11,000 houses will be constructed in 2015 is a positive inference of growth from 2014, when 10,840 were constructed. The levels that the state experienced in the so-called “boom” years from 2000 to 2002 averaged approximately 25,000 each year. That is not expected to be the norm again until 2020. As the wages and population rises, so too will the need for housing and a commensurate increase in building.
The biggest year in the area was 2006, when 64,000 homes were built. As the financial difficulties hit individuals, companies and the state in general, that number rapidly decreased to its current levels. However, the optimism is growing that by 2016 there will be 11,500 homes built. By 2017, it’s expected to be 14,000. 2018 has an expectation of 14,600. 2019 stands at an expected 16,800.
A common statement among those who are enthusiastic about the prospect of property ownership is that “they’re not building any more land.” While the economy’s struggles affected the state and the country, it was clear that the decline in homebuilding was part of that struggle. However, those who are in the business of commercial real estate and residential real estate can take the improved forecasts as a portent of opportunity presenting itself.
Source: AZCentral.com, “Metro Phoenix homebuilding still years from recovery,” Catherine Reagor, Feb. 2, 2015