The forecast for the 2008 and 2009 real estate market in Greater Phoenix much depends on the economy in the U.S as a whole. It’s a delicate financial balance which can be easily changed by unpredictable circumstances like oil moving past $120.00 per barrel. Another important note made at the 2007 Economic Outlook was that a recession is unlikely but the economy is quite delicate and any major changes (however unlikely) can trigger a recession. What we had in 2006 and 2007 and what we can expect going forward in the Greater Phoenix economy and the real estate sector. Phoenix has had strong employment growth of 5.4% in 2006, 3.2% in 2007 but it’s projected to slow to 2.9% in 2008. New job creation as well is expected to decline to 79.1 thousand in 2008. (84,6 2005, 134,8 2006) While we had a strong economy in 2005 to 2007, mid 2007 to 2008 Phoenix will not be the leader in economic growth according to McPheters of W.P. Carey School of Business. The Arizona Blue Chip Economic Forecast is “gloomy for 2008” A slowing economy was projected for 2007 but a further decline in economic growth is forecast for 2008. The housing industry is projected to take further hits. As a comparison the report states the projected decline in permits for 2007 was 6.8% while through September 2007, single family home permits were down by 15%. A 4.8% consensus decrease is expected for 2008, “but 11 of the 18 panelists expect an even greater decline” and I agree, that it should probably decline more. Housing grew at a very rapid pace during the last few years. According to Case/Schiller Home Price Index for Greater Phoenix, home prices (median) increased by: - And a decline is inevitable for the year 2007 as is clearly shown by current data.
“Price declines (Greater Phoenix real estate) are expected to continue into 2008”, Elliott D. Pollack Elliot Pollack also notes, “While the Greater Phoenix economy is cyclical, it is still one of the fastest growing major employment markets in the United States.”, “So, in the long run, we will be fine." He also notes, “…the housing market could bottom out in 2008 or 2009, it is likely to be at levels far lower than anticipated a year ago. A full recovery, i.e. when supply and demand are back in balance, remains years away. The recent changes in the credit market and the slowing economy increased the decline of the market beyond what most people expected and I believe there are still many people of varying degrees of expertise in denial about the market as it is, good for some and bad for others, but down overall. This is of course a general view and in line with the cycle, but keep in mind that certain neighborhoods will perform better than others. For instance, those areas affected by the light rail or with a more limited supply like Central Phoenix will have different results that the supply burdened suburbs on the outlying areas of Phoenix. Take a look at the specific micro real estate markets before making a real estate move, whether it be selling a home or buying one. In some sub market you may need to offer 2008 prices in 2007. We’ll have to see what the updated economic numbers are. Employment will be a good indicator of the current market and what we can expect ahead. Despite the slowing real estate market the economy is strong as a whole and should continue with positive growth but at a much slower pace. The real estate market will inevitably return as it has in the past, but for the time being any real estate investment should be make carefully and for the long term. If you considering buying or selling real estate call me and we can discuss your specific needs and analyze the market relevant to your situation. Artur Ciesielski, CCIM 602-628-4349 (quotes and data are from the 2007 Economic Forecast Luncheon Program) | 
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