[Source: Elliott Pollack] — To paraphrase Mark Twain, “The report of Phoenix’s death has been greatly exaggerated.” To be sure, the Phoenix metropolitan area, for the first time in years, is suffering through a period of economic distress both in absolute and relative terms. However, the distress is purely transitory, caused primarily by the ripple effects of a 75% decline in building permits over the last three years combined with the national slowdown in economic activity. The underlying fundamentals remain strong as does the long-term outlook.
Builders in greater Phoenix, like in many communities, overbuilt during the boom. This creates an oversupply that has been made worse by poor conditions for home sales in places like California, or Michigan, primary places from which people come to Phoenix. Yet it’s critical not to confuse today’s short-term setback, as many in the national media do, with setting the table for long-term stagnation. This pattern has been seen during previous recessions, notably between 1988 through 1992. After that, greater Phoenix came back with job growth during the expansion that started in November 2001 at three and a half times the national average.
The fundamentals that drove that recovery have not changed. These include factors such as climate; lifestyle; geographic location; pro-growth attitude; competitive tax structure; focused incentives; and relatively low cost of living. The long-term dynamics remain in place. [Note: To read the full article, click here.]