Next year will be a little better, but a full economic recovery for both the nation and Arizona is at least a few years away.
That’s according to economists who spoke today at the 48th Annual Economic Forecast Luncheon co-sponsored by Arizona State University’s W.P. Carey School of Business and JPMorgan Chase & Co. at the Phoenix Convention Center.
Arizona added 51,600 jobs from September 2010 through September 2011, which places it among the top six states for job growth, according to the U.S. Bureau of Labor Statistics. But that’s still well below the kind of recovery the state needs to replace the 324,000 jobs it has lost since late 2007. By the end of this year, only about 20 percent of the total jobs lost during the recession will be restored.
“Although the Arizona recovery is tepid at best, every key indicator is expected to improve in 2012 as compared to 2011, including jobs, incomes, sales, and even housing, said Lee McPheters, a research professor and director of the JPMorgan Chase Economic Outlook Center at the W.P. Carey School of Business. “Still, no indicator will be sharply better until the national economy moves into a faster growth path.”
McPheters pointed out that an economic recovery is well underway, but we are still dealing with what he called a “mania of pessimism.” He pointed to health care as a top growth area for Arizona both next year and for years to come.
Arizona’s real estate market also will continue its “agonizingly slow recovery” in 2012, according to local real estate expert Elliott Pollack, president of consulting firm Elliott D. Pollack and Co.
“You don’t go from having a heart attack to running a marathon overnight,” Pollack said. “The problem is on its way to being resolved, but it’s not resolved yet.” He said excess housing inventory remains the root of the problem in the real estate market. Pollack said until most of that extra inventory is absorbed, we aren’t going to see a true recovery until sometime in 2015.
About half of all of the Phoenix homes with mortgages are underwater. That’s on top of another 50,000 to 55,000 extra housing units in the Phoenix metropolitan area according to Pollack. He expects those homes to sell at distressed prices until most of the excess supply is sold.
Once the extra housing units are sold, Pollack expects to see a rapid jump in prices as pent up demand rebounds. He called the apartment market the “brightest spot we’ve had in many years.”
Vacancy rates fell from 14 percent in 2010 to 10 percent in 2011. Pollack said about 1,177 housing units are currently under construction, but many of the new complexes are still in the early planning stage. That means vacancy rates are expected to fall farther, putting significant pressure on rent.
According to the economists, the bottom line for 2012: be patient.
Source: Biz Journal