Magazine article American Banker

Forecast for Sizzling Phoenix: More of the Same

Magazine article American Banker

Forecast for Sizzling Phoenix: More of the Same

Article excerpt

The temperature isn't the only thing sizzling in Phoenix. The housing market has been red hot for years, and mortgage bankers see no signs of cooling soon.

The weather - low humidity and mild winters - has helped drive the market, luring many, especially East Coast retirees.

As a result, population and employment in Maricopa County, which includes Phoenix as well as Mesa, Tempe, and Scottsdale, have been rising.

Tracy Clark, a senior economist at Seidman Research Institute, said the county's population grew 2.7% last year and is expected to rise 2.6% this year and 2.5% next.

Unemployment was 4% at yearend 1995 and is expected to hit 4.3% by the end of this year. The national rate last month was 5.1%.

In the early 1990s, many of the area's new jobs - such as staff at the numerous retirement resorts and communities - paid relatively little. As a result, mortgages were typically small.

That's changing. In the last few years, high-tech companies including Intel, Motorola, and Honeywell have built plants in the Phoenix area, spurring an influx from California.

"Phoenix has become almost another Silicon Valley," said William R. Norton, area manager for Weyerhauser Mortgage's Arizona branch.

But Rick Rogness, vice president and manager of Inland Mortgage Corp.'s Mesa branch, said high-tech companies employ only a small fraction of workers in the area.

The consistent level of job growth has kept home builders busy. Tom Halley, executive vice president of Countrywide Home Loans' western division, said demand for new housing has exceeded supply, largely because of a labor shortage.

According to R.L. Brown, publisher of the Phoenix Housing Market Letter, single-family housing starts from January through July totaled 18,297, nearly 12% more than a year earlier. At this pace the 1996 total is likely to beat last year's 28,543, which was a record. …

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