Happy mid-September. For many months we’ve been reporting good real estate market news. Today we want to share information about signs of continued improvement and stability. We’ll take a look at consumer confidence, tourism. employment and new home sales.
Arizona Consumer Confidence:
The latest consumer confidence numbers were just published by Republic Media. In April 2013 about 69.6% of the people felt pretty good about the Phoenix economy. The latest numbers (taken in July) showed the rate was up to 72.5%. Among the questions asked was if you were planning on buying a car, furniture, or planning a major remodel or home repair. In all categories the positive response rates went up.
We decided to take a look at bankruptcy filings while exploring consumer confidence. Bankruptcy numbers are harder to manipulate than consumer polls. Our thought was simple, if people are feeling more confident, shouldn’t bankruptcy filings be down. Made sense to us anyway.
Well low and behold the US Bankruptcy Court reports the number of bankruptcies filed in July 2013 was down 17% from the same time the year before. This news supports the higher levels of confidence reported by the Rocky Mountain poll and since I don’t really trust polls the info makes me feel better. OMG… I am feeling more confident too.
Consumer confidence is probably the biggest factor to sustained economic improvement. It works on the fight or flight mechanism in the brain. If we feel safe we explore, take chances, create momentum, and dream. If we are afraid we hibernate, tighten and go into protection mode. Thus, when polls show higher consumer confidence numbers it suggests people are not only more confident, they are back dreaming of their future. This often includes improving their housing.
Phoenix Employment Numbers:
- Phoenix area employers added 53,000+ positions from July 2012 to July 2013.
- Construction jobs rose by 8400 spots.
- Hospitality Industry jobs are up 7100.
- Health Care is rising with 6600 new jobs.
- Finance, Insurance and Retail sectors are also reporting an upward tic in new jobs.
Real estate lives and dies by the job market. You have to have a job to get a home loan, you have to have a job to pay for your current mortgage, a job is important if you want an investor to rent her/his home to you. Enough said? Thus, an upward swing in jobs is good for real estate and the economy overall… especially if people learned something from the past decade and tuck a fair sum into savings. BTW… unemployment numbers are down a bit too.
Tourism Is Rising in AZ.
The Arizona Department of Revenue reports another year of rising numbers in the hospitality industry. Restaurants, bars, hotels and motels combined to report sales up 6.8% from a year ago. If you follow hotel booking numbers you know many properties experienced much higher than normal occupancy rates this summer. The graph to left shows the slight uptick in hotel occupancy numbers.
One might ask way we look at the hospitality industry when talking about real estate and the economy. It’s pretty simple… a lot of people who visit Phoenix and Scottsdale on business come back here to live or retire. A recent USA Today article showed Phoenix as the number one city to retire. Another reason to keep an eye on hotel beds is the significant roll tourism plays in our healthy economy.Someone has to play on our 220+ Arizona golf courses, eat in of the balizzion great restaurants or shop at Kierland, Scottsdale Fashion Park, The Biltmore or other spectacular shopping spots.
New Home Sale in Greater Phoenix Going Up.
New home sales are slowly on the rise. Applications for new permits were up from in Q2 of 2013. (RL Brown) Likewise, new home sales have been showing gradual climbs. The biggest challenge is not a lack of new home buyers, rather qualified labor and affordable land.
From the resale side of the real estate market, what Ron and I do, ne home sales speak volumes. For many years the price of a used home was significantly less than a new one. The result was few new homes being built and sold. As home values rose in the 2012, home builders started getting excited. Applications for new building permits shot up and the scant inventory of already completed homes sold quickly.
The additional rise in home values that occurred from Feb to mid-July 2013 made the new build market even more favorable. A number of infill projects popped out of the ground and more are scheduled. Of note is the fact that many are multifamily rentals. Just look at Scottsdale and Lincoln, Camelback just west of Scottsdale Rd and on Roosevelt in downtown Phoenix.
We believe that home values have risen to the point that builders can afford to build. As more new builds hit the market this will help balance out the low inventory levels we’ve experienced for the past two years. The result should be a more gently swinging pendulum that won’t lay waste to those in it’s path.
A special thanks to Connie Sana with Republic Media (The Arizona Republic) for providing great info to include in this article.
Gene Urban & Ron Urban
The Urban Team at Realty Executives
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