Here’s what Valley economists say about possible housing market plunge
Local economists are saying a recent report projecting a 2008-like plunge in the housing market is no reason to panic.
The New York Post reported Tuesday that Goldman Sachs warned clients that the Phoenix; Austin, Texas; San Jose, California; and San Diego markets “will likely grapple with peak-to-trough declines of over 25%” in 2023.
However, Jim Rounds of Tempe-based Rounds Consulting Group said “the economic fundamentals are completely different now” than they were in 2008, when home prices fell 27% nationwide, sparking the Great Recession.
“We’re going to continue to have growth,” he told KTAR News 92.3 FM.
“We’re doing a great job adding employment opportunities for people, and so I’m not nearly as worried. So, ignore that report for now [and] expect home prices to come down a little bit more slowly.”
Danny Court, senior economist with Scottsdale-based Elliot D. Pollack & Company, said the Goldman Sachs projection for Phoenix in 2023 isn’t off base, but he sees it as a correction, not a crash.
He told KTAR News that Phoenix-area home prices have already fallen by over 10% from the May 2022 peak and could fall another 15% this year. That would return prices to the levels from the April or May of 2021.
“I don’t think anyone thought they were getting a good deal in 2021 on their home,” Court said.
“So, really … the reason that the percentages look so drastic is because we had such a drastic run-up in prices. So, this is a small reset.”
Another stark difference from the Great Recession era is the frequency of foreclosures. Court said the Valley had 8,000-10,000 foreclosure notices a month in 2008-09.
“We’re seeing about 200 to 300 a month now, and that’s a completely normal market,” he said.
Local economists are saying a recent report projecting a 2008-like plunge in the housing market is no reason to panic.
The New York Post reported Tuesday that Goldman Sachs warned clients that the Phoenix; Austin, Texas; San Jose, California; and San Diego markets “will likely grapple with peak-to-trough declines of over 25%” in 2023.
However, Jim Rounds of Tempe-based Rounds Consulting Group said “the economic fundamentals are completely different now” than they were in 2008, when home prices fell 27% nationwide, sparking the Great Recession.
“We’re going to continue to have growth,” he told KTAR News 92.3 FM.
“We’re doing a great job adding employment opportunities for people, and so I’m not nearly as worried. So, ignore that report for now [and] expect home prices to come down a little bit more slowly.”
Danny Court, senior economist with Scottsdale-based Elliot D. Pollack & Company, said the Goldman Sachs projection for Phoenix in 2023 isn’t off base, but he sees it as a correction, not a crash.
He told KTAR News that Phoenix-area home prices have already fallen by over 10% from the May 2022 peak and could fall another 15% this year. That would return prices to the levels from the April or May of 2021.
“I don’t think anyone thought they were getting a good deal in 2021 on their home,” Court said.
“So, really … the reason that the percentages look so drastic is because we had such a drastic run-up in prices. So, this is a small reset.”
Another stark difference from the Great Recession era is the frequency of foreclosures. Court said the Valley had 8,000-10,000 foreclosure notices a month in 2008-09.
“We’re seeing about 200 to 300 a month now, and that’s a completely normal market,” he said.
Here's a first look at the state budget as lawmakers rush to wrap up work this week
Lawmakers Monday kicked off the formal push to finalize a state budget — including a permanent tax cut of up to $1.9 billion — hoping to finish work before the Memorial Day weekend.
The nearly $13 billion spending plan and related policy changes will get their first public hearing Tuesday.
The appropriations committees in the House and Senate open hearings on the budget at 8 a.m. and 9 a.m., respectively.
The plan includes creation of a single income tax rate of 2.5%, phased in over the next two years.
Rep. Ben Toma, the House majority leader and key proponent of the flat tax, said some details still need to be worked out. That includes doing something to ease opposition from Arizona's cities and towns, which stand to lose up to 30% of the revenue they share with the state under the flat-tax proposal.
One workaround could include extending the amount of time that cities are buffered from a cut, although Toma, R-Peoria, said he believes increased sales tax collections due to economic growth will compensate for any loss in state-shared income taxes.
The tax package also seeks to leave intact the 3.5 percentage point increase in the top tax rate that voters approved for education in Proposition 208. But it caps the maximum rate that any taxpayer would pay at 4.5% and would have the state's general fund make up the difference.
This protects not only Prop. 208 revenues, but also the high-income earners subject to Prop. 208: People whose adjusted income is $250,000 for a single filer ($500,000 for married filers). That will cut an estimated $370 million from the state's general fund.
Policy changes in the budget
Wrapped up in the 10 budget bills are numerous policy changes. They include:
- An increase in the state's unemployment compensation to $320 a week, up from the current $240. However, it would make the benefit available for 24 weeks, instead of 26, applies only if the state unemployment rate is 5% or lower, and would not take effect until July 2022.
- A requirement that school districts clarify their open enrollment policies, allowing parents to enroll their students in any school within the district in which they live, or any district statewide, if there is capacity.
- Creation of a transportation grant program that would reimburse parents for the expense of getting their children to school. It also includes $10 million for school districts to explore ways to modernize their transportation services, perhaps by using ride-share companies or other alternatives to the traditional school bus.
- $50 million in increased funding for special education services.
- Exemption of military pensions from state income tax.
- An increase in the dependent child tax credit to $150 from $100 for children age 17 and younger. For dependents above 17, an increase to $75 from $50.
- A prohibition barring the state's universities from requiring students and staff to get the COVID-19 vaccine.
- Pay raises for some state workers, such as 10% pay increase for state Department of Public Safety troopers and civilians, 11% for entry-level caseworkers at the Department of Child Safety and 5% for correctional officers at the state Department of Corrections, Rehabilitation and Reentry.
Several measures in the GOP-created budget target the Democrats who head the state's Department of Education and the Secretary of State.
Oversight for teacher certification would move from the education department, run by Democrat Kathy Hoffman, to the state Board of Education. The board is appointed by the governor, and Arizona has had GOP governors for the past 12 years.
Secretary of State Katie Hobbs would be barred from hiring any outside attorneys under one of the provisions of the budget package. She could have one full-time staff person as an advisor. Hobbs has relied on outside attorneys to represent her in cases such as a lawsuit over the ongoing audit of Maricopa County's election results, for example. The attorney general, meanwhile, would be prohibited from providing legal advice to the secretary of state.
Another provision would give Attorney General Mark Brnovich, a Republican, authority in all election-related litigation until 2023 — after the next election and the end of Hobbs’ term.
As the state’s top election official, Hobbs has taken positions on election laws that clash with the attorney general’s views. The offices took very different positions in front of the U.S. Supreme Court earlier this year, for example, on the question of whether two state laws violate the Voting Rights Act.
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Thousands of jobs in grocery stores, health care and other fields are available!
As the economy reopens more fully, hundreds of businesses around the Valley are seeking to hire employees. In fact, many are having trouble filling all their staffing needs, even after hosting prior job fairs, and some are offering bonuses or other incentives to lure new workers.
Here are some of the current openings in a range of industries:
Looking for something in the NW Valley
The City of Surprise has lots of job postings from local businesses. Surprise businesses can even list their job openings for free.
Grocery workers in demand
Bashas' is looking to add close to 700 employees to fill various part- and full-time jobs at its own supermarkets and those under the Food City, AJ's Fine Foods and other brands.
The open positions range from hourly clerks to store managers and include skilled bakers and meat cutters. Bashas' hiring needs continue even after the company hosted a job fair in Phoenix in early April.
Bashas' offers flexible hours, benefits, a grocery discount, competitive pay and more. Applications may be completed at bashas.com.
Medical drivers needed
Veyo, which offers credentialed rideshare services for non-medical emergencies, seeks to hire 1,000 additional drivers in Arizona over the next 30 days and is offering a special $1,500 sign-on bonus for new drivers who use the promo code AZApril. The expanded fleet will help consumers make it to COVID-19 vaccinations and other medical appointments. Veyo is guaranteeing $4,000 in earnings to new drivers in the program.
The program provides access to seniors, low-income individuals and those with mobility issues. Veyo drivers set their own schedules each week. For more information, visit veyo.com/drivers.
Air-conditioning installers in demand
Chas Roberts, the heating and air conditioning company, is looking to fill about 70 installer positions and will train them through a partnership with the Refrigeration School in a three-week course.
For more information about enrolling in the program with RSI and Chas Roberts, go to rsi.edu/get-started/chas-hvac-installer
Also, Chas Roberts and the Refrigeration School are providing scholarships to some students enrolled in RSI's refrigeration and electro-mechanical programs.
Fidelity Investments plans to add an undetermined number of “technologists” and other positions, many of them remote.
The financial giant has hired about 65 people locally since the end of 2020. Fidelity also is expanding employment in about 20 other metro areas nationally.
Benefits include caregiver subsidies, access to elder- and child-care coordinators and flexible work schedules. For more information, go to jobs.fidelity.com.
Hundreds of openings at Sonic
The Sonic Drive-In restaurant chain and many of its franchise owners are looking to hire nearly 500 people . Those are among 20,000 positions nationwide that include carhops and managers.
More information can be seen, and applications submitted, at careers.sonicdrivein.com.
McDonalds is hiring, too
McDonald’s restaurants are looking to fill 1,250 positions across Arizona, including the NW Vallley and will host a hiring day April 28. On that day, interested candidates can go to select McDonald’s locations and receive an interview opportunity on the spot, with no prior scheduling required.
Job seekers also may text ‘worksforme’ to 36453 to start an application or visit McDonalds.com/careers to learn more.
Medicare assistance sought
HealthPlanOne, which helps seniors choose Medicare insurance plans, is looking to fill about 200 openings for remote Medicare sales consultants and sales representatives.
Two West Valley small businesses share how they've fared a year into the pandemic
Taylor Seely
Arizona Republic
A Litchfield Park bakery and Surprise coffee and tea shop started the pandemic feeling surprisingly strong.
Neighbors showed up to support them. Some wrote checks and dropped off extra cash, telling one business owner, "Your dream is my dream."
The owners of Abbie Cakes and Sweet Tea echoed sentiments of gratitude. Neither expected such warmth and support from their communities.
But a year later, the owners have landed in vastly different places.
While one struggles to adapt during a pandemic that's thrown wrenches in almost every plan, the other has found unexpected success from the forced innovations.
Small businesses make up 9 out of 10 businesses in Arizona, according to the U.S. Small Business Administration. Here are two businesses' stories.
'Further from my vision' Marianne White opened Sweet Tea in August. The Surprise coffee and tea shop also sells treats, home decor and handcrafted gifts. White said she wanted Sweet Tea to be a second home for people. At least that's what she was expecting when she signed her lease back in February, before COVID-19 overwhelmed Arizona.
Friends could hang out, kids could do homework after school, and most importantly to White, local deaf residents would have a refuge. Sweet Tea's employees — mostly White and her family, at the moment — are all fluent in American Sign Language.
It's the language White used to communicate with her daughter, who is on the autism spectrum, when she was younger. White said after learning the language and working as a translator, she wanted to spread deaf awareness and create an inclusive space.
"They can order, they can ask questions. They can do all that without having to have someone interpret for them or having to rely on anybody else," White said.
But in a state that has consistently made headlines for its high infection rates and with more than 16,000 residents dead from COVID-19, fewer people are going out to eat or drink.
White is hopeful that business will improve as more people get their vaccines, but the change has been minimal so far, she said. Sweet Tea is struggling.
It started after signing the lease in February. She planned to open in March, but as a first-time business owner, she had a lot of questions.
She struggled to get answers about permits and health regulations from city and county employees who were sent to work from home during the pandemic, she said. "They don't communicate at all."
Sometimes she was fed contradictory information, like how many sinks she was required to have, or when the fire department was supposed to come to test the sprinklers.
White also said paying rent before the business opened was difficult. She wanted to apply for financial assistance, but most of the programs were restricted to businesses that had been open for at least a year.
Sweet Tea opened its doors by August. There was no grand opening, but Surprise Mayor Skip Hall attended a small ribbon-cutting ceremony at the store and gave White a plaque thanking her for bringing deaf awareness to Surprise.
In the months following, White said it's been difficult to adapt to changes required by COVID-19. Some weeks are excruciatingly slow.
It's not the hang-out spot she imagined. Parents aren't bringing their kids in after school. They're probably homeschooling them to keep them safe, White figures.
Schools across the Valley are struggling with declining enrollment. An estimated 50,000 students in Arizona didn't return to public school for the 2020-2021 school year.
White said the more she pivots and adjusts, the further she gets from her vision of an inclusive space where people come to hang out.
"As a community, we have come together a lot, but at the end of the day, we have to make money," White said. "I would love to be here for the long haul, but there's definitely uncertainty."
Forcing innovation Brittanie Cordova, owner of the stop-and-go bakery and coffee shop Abbie Cakes in Litchfield Park, said the biggest changes to come from the pandemic have made her business better and stronger.
She started Abbie Cakes from her home as a fun side-gig. After her treats grew in popularity, she quit her job as a nurse to open the brick-and-mortar shop in August 2019. Before she could get in a proper routine, COVID-19 came.
She was terrified. She checked her nursing license, thinking she might have to go back. But to her astonishment, business boomed. She said the community she had built overtime turned out more than she could have imagined.
Still, there have been fluctuations. She often doesn't know how much stock to order. One week, if in-person school is closed, Wednesdays might be a busy day. The next week, it might bump back to Saturday. It's hard to plan when everything is up in the air, she said. May and June were particularly difficult.
Delivery: Varies
Your EmailCordova received federal assistance under the paycheck protection program to pay her employees, which she said helped a lot. She didn't have to let anyone go but some hours may have been cut.
Some changes incorporated, however, were welcomed and will stay permanently: she likes the extra sanitizing protocols. As a former nurse, she questioned why she hadn't thought to implement them anyway.
She also likes the extra space in the dining room from taking away the tables and chairs. Online ordering and curbside pickup are also not going away, she said.
The pandemic has mostly made her business more durable, she said. Abbie Cakes is even looking to expand. Cordova hopes to add five employees to her existing nine in the near future.
March has been a steady month for the business, she said. It feels strong compared to past months, but sales were similar at this time last year.
"Is that because it was the start of the pandemic and people were trying to support local? Is it because the weather is nice this year?" These are the questions Cordova can't answer.
She has no frame of reference for what "normal" is.
Abbie Cakes is launching a YouTube channel and moving forward with plans. She's taking it one day at a time, but is feeling cautiously optimistic about the future and Abbie Cakes' place in it.
NW Valley Could See a New Regional Tourism Asset!
Residents of NW Valley could see a major gambling expansion in Arizona, and the Tohono O'odham eye property near Loop 303 Northern Parkway. "This is a major announcement, not only for jobs, but will be become our newest regional tourism asset along with the White Tank Regional Park, Wildlife Zoo and Surprise Stadium" said Raoul Sada, president and CEO of the Chamber
The decision was part of an agreement between the city of Glendale and the Tohono O'odham Nation, which already operates the Desert Diamond Casino West Valley. The Glendale council also agreed not to interfere with the tribe's plans to build further west, and to publicly support a new casino. "
The current state gaming compact limits the Tohono O'odham Nation to four gaming facilities in Arizona, which it has near Tucson, Glendale, Sahuarita and Why. This newly proposed location would be a fifth.
The southern Arizona-based tribe was able to build the West Valley casino, far from most of its reservation, by making use of a 1980s settlement to replace tribal land that was damaged by flooding. The federal settlement allows the tribe to purchase replacement land in unincorporated areas and apply to have it designated as reservation land. The Tohono O'odham Nation would have to go through the same process with this new location.
The deal between Glendale and the Tohono O'odham Nation will bring some cash Glendale's way. The agreement outlines:
A one-time $400,000 payment to Glendale for signing the Feb. 9 agreement. The payment is "to help fund the operations of the city," according to the agreement. $1 million per year, plus an additional 2% each year, for 20 years once gaming begins.
Residents of NW Valley could see a major gambling expansion in Arizona, and the Tohono O'odham eye property near Loop 303 Northern Parkway. "This is a major announcement, not only for jobs, but will be become our newest regional tourism asset along with the White Tank Regional Park, Wildlife Zoo and Surprise Stadium" said Raoul Sada, president and CEO of the Chamber
The decision was part of an agreement between the city of Glendale and the Tohono O'odham Nation, which already operates the Desert Diamond Casino West Valley. The Glendale council also agreed not to interfere with the tribe's plans to build further west, and to publicly support a new casino. "
The current state gaming compact limits the Tohono O'odham Nation to four gaming facilities in Arizona, which it has near Tucson, Glendale, Sahuarita and Why. This newly proposed location would be a fifth.
The southern Arizona-based tribe was able to build the West Valley casino, far from most of its reservation, by making use of a 1980s settlement to replace tribal land that was damaged by flooding. The federal settlement allows the tribe to purchase replacement land in unincorporated areas and apply to have it designated as reservation land. The Tohono O'odham Nation would have to go through the same process with this new location.
The deal between Glendale and the Tohono O'odham Nation will bring some cash Glendale's way. The agreement outlines:
A one-time $400,000 payment to Glendale for signing the Feb. 9 agreement. The payment is "to help fund the operations of the city," according to the agreement. $1 million per year, plus an additional 2% each year, for 20 years once gaming begins.
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Lagoon Water Park, Entertainment Venue Headed to West Valley.... A new regional tourism asset for the NW Valley!
A beach party in Arizona might not be such a wacky idea in a couple of years because the West Valley will soon be home to an 11-acre beach lagoon, planned to include scuba diving, windsurfing and water jet packs as part of a 48-acre entertainment destination. TV News Story The planned project be near the Westgate Entertainment, near E 95th Avenue and Cardinals Way, near the State Farm Stadium. The developer of the project is ECL Glendale LLC. Crystal Lagoons Island Resort, will have a similar feeling to Downtown Disney, with experiential retail, amusement park rides, a 4D theater, a themed hotel and other hotel uses on the site. The project will also include an “aero bar,” a bar in the middle of the lagoon on a vertical structure that becomes elevated 135 feet in the air so patrons can get a 360-degree view. It also will include the world’s largest helium balloon. The balloon will be on a tether with a gondola that raises riders 400 feet in the air. The 4D theater will incorporate sensory elements like smell, temperature or moisture into the viewers’ experience. The theater will be in conjunction with SimEx-Iwerks Entertainment, which has access to Disney proprietary character and products. |
Industrial Construction Report
Phoenix is on track for a record level of new industrial supply to be completed in 2020, but so far new supply has outpaced demand, according to CoStar research. According to data compiled by Jessica Morin, director of market analytics for CoStar “Phoenix ranks ninth for U.S. markets with the most industrial space under construction. When the space under construction is completed, it will expand the market’s existing stock by 3.1%. That being said, Glendale and Goodyear have the most space under construction as compared to their existing space. Glendale will add about 40% to its inventory and Goodyear will add about 20% when the space under construction is completed. Nationwide, industrial net absorption was forecast to remain negative through the remainder of 2020 and into the beginning of 2021, according to a study done by NAIOP. However, Arizona has not seen the steep decline some other markets have suffered, Suzanne Kinney, president and CEO of the Arizona chapter of NAIOP said. “There have been a handful of large deals that have gone our way,” Kinney said, adding that several manufacturers have recently moved or expanded in Phoenix recently, and users like food and beverage makers are also growing in the area. Some of the growth, such as the pivot by Honeywell in Phoenix to make personal protective equipment, were directly related to the Covid-19 pandemic, Kinney said, but other moves were “a continuation of the positive trends we’ve seen over the past few years.” |
PPP Loans helped nearly 1,500 local businesses
A new Surprise Regional Chamber of Commerce report showed almost 1,500 small businesses in the Northwest Valley have received $155 million in PPP loan assistance.
Based the Chamber’s latest data, the PPP loans helped to retain 6,879 workers in the region (El Mirage, Sun City, Sun City West, Surprise, Waddell and Youngtown.) However, several small businesses in Surprise and surrounding areas are still suffering from the COVID-19 slowdown and waiting for Congress to act on additional bailout money.
“When the previous bailout programs were rolled out there was much confusion and turbulence, and small businesses did not initially fair well,” Chamber President and CEO Raoul Sada said. “The Chamber wants to do its part, making sure that does not happen again, and we are lobbying Capitol Hill for a packages that favor small businesses.”
Key Points:
•The SBA has just released a massive trove of data on PPP loans. This was a significant step forward in transparency by the government, prior to this the SBA resisted requests to share the recipients of the funds. This is why it is so important for the Chamber to hold government officials accountable, and for us to demand transparency at all levels of government (local, state and federal!)
•More than 81,000 Arizona businesses and nonprofits have received forgivable loans through the federal government's Paycheck Protection Program totaling $8.6 billion, according to the U.S. Small Business Administration.
•The Paycheck Protection Program, which was designed to avert mass layoffs during the Covid-19 pandemic.
•PPP loans are not made by SBA. PPP loans are made by lending institutions and then guaranteed by SBA.
•According to the data, 58 businesses in Arizona received between $5 and $10 million, the maximum amount allowed under the program. But the vast majority of loans, approximately 86%, are valued under $150,000.
•Close to 1500 small businesses received PPP loans in the six cities that make up the Chambers service territory. The amount of cash infused into our local economy was over $154 million dollars! Based on application data, the loans help to retain 6,879 workers in our region.
•Approximately 42 businesses were non-profits (2.8% of the recipients)
Based the Chamber’s latest data, the PPP loans helped to retain 6,879 workers in the region (El Mirage, Sun City, Sun City West, Surprise, Waddell and Youngtown.) However, several small businesses in Surprise and surrounding areas are still suffering from the COVID-19 slowdown and waiting for Congress to act on additional bailout money.
“When the previous bailout programs were rolled out there was much confusion and turbulence, and small businesses did not initially fair well,” Chamber President and CEO Raoul Sada said. “The Chamber wants to do its part, making sure that does not happen again, and we are lobbying Capitol Hill for a packages that favor small businesses.”
Key Points:
•The SBA has just released a massive trove of data on PPP loans. This was a significant step forward in transparency by the government, prior to this the SBA resisted requests to share the recipients of the funds. This is why it is so important for the Chamber to hold government officials accountable, and for us to demand transparency at all levels of government (local, state and federal!)
•More than 81,000 Arizona businesses and nonprofits have received forgivable loans through the federal government's Paycheck Protection Program totaling $8.6 billion, according to the U.S. Small Business Administration.
•The Paycheck Protection Program, which was designed to avert mass layoffs during the Covid-19 pandemic.
•PPP loans are not made by SBA. PPP loans are made by lending institutions and then guaranteed by SBA.
•According to the data, 58 businesses in Arizona received between $5 and $10 million, the maximum amount allowed under the program. But the vast majority of loans, approximately 86%, are valued under $150,000.
•Close to 1500 small businesses received PPP loans in the six cities that make up the Chambers service territory. The amount of cash infused into our local economy was over $154 million dollars! Based on application data, the loans help to retain 6,879 workers in our region.
•Approximately 42 businesses were non-profits (2.8% of the recipients)
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