Preparation for Growth in a Down Market- A Look at Phoenix Arizona

I don’t know who first said it, but there’s a phrase thrown around town to describe Phoenix - It’s that “the business of Phoenix is growth.”

I'm Chuck Willman, a real estate agent based in the Phoenix metro area. Here's Part I of a series I wrote for publication regarding the Phoenix market.

Market Concerns: Whether you look at education, commerce or other market concerns- we all face the same dilemma… almost every economic, political or social decision has a growth component that has to be considered.

For local governmental leaders, one doesn’t want to be too optimistic and overbuild or too pessimistic and underfund. The wheels of government tend to move slowly in most places… these growing pains are most prevalent in the cities that have seen the most growth.

Growth brings challenges such as ensuring that our students have schools that will meet the needs of a growing populace. I’ve got to hand it to the local school districts- they’ve been remarkable in their ability to plan ahead.

Business I’m less concerned about. Adam Smith’s “invisible hand” is working very well here… there always seems to be smart business people who know how to take advantage of a good thing when they see it. I’m pleasantly surprised that- for as fast as Phoenix continues to grow, we still keep making those lists of “great places to start a business.”

Our job market is quite strong. In some sectors we’re down but we seem to have overcome the hurdle of being narrowly focused in business.

We’re far more well-rounded than we were before the last economic boom and are now less reliant on the traditional markets of tourism and construction. Bigger businesses have moved in, mom and pops are doing well and distance workers are finding that they don’t need to be in the big city to perform their jobs… this valley provides a safety net. Those who had to go elsewhere to find high tech or other specialized jobs are finding that they can ply their trade here.

What I’m most excited about is this… the “Pure Growth Factor” - the population influx that we’re still experiencing has a very positive long term effect on the area. Phoenix is now the fifth largest city in America. Though we have plenty of room to absorb more people geographically… at some point scarcity will exert a few realities on the market. We may not be paying New York, Los Angeles and Chicago prices for real estate right now… but at some point we will.

I guess the easiest way to say it is this: time heals even poor real estate buying decisions. Where there is little population growth you may not live long enough to realize profits from a poor real estate investing decision. Where there’s a continual population rush there’s bound to be appreciation- if not now… certainly in the coming years. In other words- even the inexperienced investor might see their bad investment correct itself just be allowing enough time to reach positive equity. I don’t encourage this thinking- but it’s nice to know there’s a potential safety net to help those who've found themselves in an upside down equity position.

Summarizing: for the long term investor it’s hard not to give Phoenix a very good look. If this population continues to grow (some experts say we’ll double in population within the next two decades… others say three) as is projected- that’s very good news for those who decide to own a piece of property here. There’s great upside to purchasing big city property at little city prices.

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Chuck Willman is the founding member of AZvest ... a collection of investment minded individuals with an interest in Arizona real estate.