November 6, 2007
Where does Phoenix housing go from here?
Analysis: A major university or two or three leading its field in the discipline(s) of growth supercharging the community is a must for the community to compete. A big dose of culture and sports and entertainment is required too.The U.S. is going to do a major portion of the thinking for the world, prepare its economic plans and source its finances if the country is to continue its primary world power status. Recent results indicate that the growing knowledge economies will feature a world class international airport and/or a seaport along the coast. A major university or two or three leading its field in the discipline(s) of growth supercharging the community is a must for the community to compete.
The Phoenix Metro area has every ambition to be world class as soon as possible. No more cowboys, citrus, cattle, climate/tourism, copper, retirement and other basic industries will do for this town. The reliance on real estate for one of three jobs is going to be history. There just isn’t enough length to these real estate sectors without the impetus of major industry to prevent boom and bust.
The bust is certainly upon us in Arizona housing now. Some including this writer think we’ll be another five years cleaning up, reestablishing the housing financial markets, bringing product change and balancing productivity to affordable demand. In another industry, you saw how Daimler Benz lost $ 38 million chasing a market long gone with the Chrysler investment, are watching Ford risk its last capital and GM stake its future on an offshore market which at least in China may have overwhelming competition. The top metro homebuilders, major and minor land developers and those now entering the market continue to stand the risk of losing a bunch of this magnitude.
The Arizona market to the writer is not now suitable for financial analysis anticipating a stable, ratable income stream. The only prudent Arizona acreage investment is the rock bottom true agricultural land pricing acquisition on the urban fringe with the push to development yet to appear. Since most all such acreage is in the hands of a real estate investor now, a long, sustained period of loss will occur to bring about such an event. Since Phoenix doesn’t have much of a leg up in the knowledge industries to bring more buyers into affordability range, I see the availability of acreage at ag prices on the urban perimeter to be inevitable. The only caveat here is the sheer overwhelming cash available in the investment markets seeking a home. Obviously, in my opinion such investment funds should be spent in non-housing arenas where a value-added component will add to the knowledge industries which will stabilize housing. Whether the funds will invest cautiously or chase a lost market opportunity will change the futureReport a Concern
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