If you're looking for one red-hot, steaming housing market, look no further Phoenix is it.
Think of air conditioning as a way of life. That's phoenix.
But the climate is not all that's hot in the Valley of the Sun. The Phoenix housing market is as hot as the 99 degrees the city was posting in a stretch of late-April days this year. Fueled by an influx of disenchanted Californians, a population exodus from the Rust Belt to the Sun Belt, relocating corporations, retiring seniors and builders on a rampage, this market has become a lender's paradise.
And if you're not a lender, a Realtor or a builder here, you definitely want the ice cream franchise. Yet residents seem to take the heat in stride. Natives call the weather one of Phoenix's draws (even though outsiders might consider 99 degrees in early springtime excessive). Veteran transplants from the East quickly adapt to their new home and become "geographic snobs," praising its lack of winter to visitors who just recovered from the Blizzard of '96.
Just the same, when water becomes a status symbol, you know there's something going on. Former Lincoln Savings and Loan tycoon, Charles Keating, since convicted when his thrift empire went belly up, built his world-class Phoenician resort right in Phoenix at the foot of Camelback Mountain. (The mountain really looks like a kneeling camel. And at the entrance to the classy resort is a 12-foot wall of continuously falling water. The grounds must eat up countless gallons of water daily - keeping fairways green and landscaping from wilting. It's guaranteed to impress those not expecting lush foliage in the middle of an arid landscape.
But not far away are many reminders that this is a parched, dry and hot natural landscape when left to its own resources. People's front yards sport mini-spotlights targeted on their giant cactus rather than on Japanese maples or Dogwood trees. Golf courses viewed from the airplane appear to be no more than a grouping of very small, very green ponds surrounded by brown - as course designers build in a minimal amount of green fairway to hold down maintenance costs. And middle-class motorists - not just cool dudes cruising - have avidly adopted the all-around dark-tinted windshield look for their cars - sporting it on new Jaguars, Toyota 4-Runners and Ford Crown Victoria's. And even though air conditioning is a fact of life, you will find virtually no business person wearing a suit jacket inside or out of the office - and this is April.
Heat of another kind, that given off by the torrid housing market, is evident by the fact it's virtually impossible to get a local branch manager on the phone. The odds of getting anything other than voice mail on the first try are like getting four inches of rain in May.
Maricopa County - the vast stretch of space surrounding and including metropolitan Phoenix - is growing like gang-busters. The county covers 9,127 square miles and accounts for about two-thirds of the state's economic activity, according to Arizona Business, March 1996, published by the Arizona State University (ASU) College of Business. Also part of the county, the nearby cities and towns of Mesa, Tempe, Chandler, Avondale, Scottsdale, Peoria, Glendale and Gilbert are thriving as well. Of the state's 10 largest cities, only three are outside Maricopa County - Yuma, Flagstaff and Tucson.
Insiders point out that the Phoenix market has not posted negative economic growth for 2 1/2 decades - even during the tough S&L times in the late '80s and early '90s when several institutions failed, REO properties mushroomed and land prices tanked. A December 1992 issue of Arizona Business notes, "Though a national recession lasted from July 1990 through at least April 1991, personal income gains in Arizona remained positive in 1990 and 1991." The same economic resilience that powered Arizona, and Phoenix in particular, right through the national recession is continuing to foster an enviable economic environment. It is being fed by a powerful combination of an influx of people and jobs.
Between 1980 and 1990, Arizona saw a 35 percent increase in its overall population, a rate of growth that was third fastest in the nation. The state added 947,000 people during the decade, making its 1990 population still only 3,665,000, according to the Center for Business Research at ASU's College of Business. That compares with a total population of California of 29,760,000 in 1990. At only the 24th most populous state in the nation, Arizona still enjoys a lot of wide open space, enhancing the quality of life as well as offering cheap and available land to build on and develop. By contrast, California, the most populous state in the nation, is starting to bulge at its geographic seams.
Part of what is driving the job growth in Arizona are low labor costs and a low cost of living. As American corporations seek to cut costs overall, Arizona will remain an attractive place to relocate operations. This is positive in terms of the long-term economic outlook for the state. Job seekers also don't consider the state's low wages as an automatic negative when weighed with higher quality of living and remarkable housing affordability. Tom Rex, writing in Arizona Business, March 1996, states: "That a specific individual working a specific job is paid less in Arizona than that individual would be paid on average elsewhere in the nation has been termed the 'sunshine effect.' In other words, due to perceived advantages in amenities, such as climate, workers in Arizona are willing to accept lower wages than they would on average elsewhere."
Whether it is the sunshine effect, or the allure of jobs and open space, there is no denying that Arizona is in a growth mode in this decade. The state had a boom year in 1994, when retail sales jumped 12 percent over 1993, single-family permits leaped 26.6 percent and multifamily units permitted soared by 155 percent, according to data from the L. William Seidman Research Institute at ASU published in the January 1996 issue of Arizona Business. The boom in 1994 came in response to a steady climb in population and personal income that was even more pronounced in the economic heart of the state - Maricopa County.
To accommodate the many moving into the Phoenix area, multifamily permits in Maricopa County climbed by 186.2 percent in 1994, and that was after jumping by 64.7 percent in 1993 and by 24.2 percent in 1992. Permits for apartment construction climbed by another 58.4 percent in 1995, but they were forecast to finally decline this year and next, according to an article by Tracy Clark, senior economist with the Economic Outlook Center, at the Seidman Research Institute, that appeared in the January 1996 issue of Arizona Business.
Retail sales in the county climbed by 14.3 percent in 1994 and were estimated to jump by 8.7 percent in 1995, rise again by 6.5 percent this year and by 6.2 percent next year, according to the ASU newsletter. The economy in the Phoenix metro area is creating jobs fast enough to absorb the population boom and to keep unemployment well below the national average. The unemployment rate went from 5 percent in 1993 to 4.9 percent in 1994 to an estimated 4 percent in 1995 to a forecast 4.3 percent this year.
The population growth rate for Maricopa County was 2.7 percent in 1994...