Arizona Dreaming: Optimistic Real Estate Forecasts

Our local economist at ASU is an optimist. He’s also a nutcase, IMHO. This morning, at the Urban Land Institute’s annual real estate forecast, Prof.Steve Happel actually said the freedom of Arizona, the lack of gun control, will attract people. The man on the panel with him, Bret Wilkerson of Austin-based Hawkeye Partners, must have been inwardly aghast. He just moved his family to Austin from Massachusetts.

From what I hear in Silicon Valley and on the east coast, where I visit frequently,no one wants to come to Arizona with our cruel attitudes toward health care and education, Hispanics and guns. It’s very easy to scare people and very hard to unscare them. We scared them recently in Tucson.

And where is the pull of jobs? Happel thinks three sectors will drive job growth: biotech and tech, construction, and retail. In the former sector, we are not even on the radar, because we don’t have density, 24 hour cities, or mass transit. To the tech sector, we look like a bunch of gun-toting uneducated hicks. And the other two sectors can’t recover without renewed immigration.

In Happel’s view, Arizona is coming back anyway, although he admits it has been hampered by lack of net inmigration. It is amusing how the numbers belie his free market optimism.Arizona grew only 1,5% last year, because people can’t move here or won’t (In 2005 we added only 80000 houses. In 2009 we added 12000.)

The biggest question for Arizona is where the people are going to come from. The 75m baby boomers have already come if they are going to; the 58m Gen-Xers have community roots and can’t move while their kids are in school. So it’s the Echo Boomers we have to depend on. There are 78m of them, and traditionally 21-35 year olds come here in large numbers. They are color blind, however, and we have alienated the Hispanic community. Despite our shortcomings in livability, amenities,and open attitudes toward Hispanics, Happel remains optimistic.

Wilkerson, on the other hand, is a realist. In his view, between the desire of young people for more tech, more density, and more 24-hour activity than we offer, and the decline in household size and home ownership patterns among those same Gen-Yers, we are going to have less growth.

In his view, the only way out of all this is inflation, and that’s not coming for a few more years.

Posted via email from Not Really Stealthmode