The big question begging the real estate market and economy

Jim Belfiore speaking at AZDealmakers. / Pinal Partnership

By Mike Sunnucks | Rose Law Group Reporter

Homebuilding CEOs, real estate brokers and other dealmakers are all getting the same question as 2020 kicks into gear.

Will the market keep on humming or is the national and Arizona economy in for a drop including the dreaded R-word (recession)?

But barring a tumultuous ‘black swan’ moment that upends consumer and business confidence, real estate industry chieftains at the 11th Annual AZ Dealmakers event on Thursday don’t see a recession or market drop coming soon.

“It feels different than the last cycle,” said Troy Wahlberg, a real estate industry veteran who has most recently served as vice of president of acquisitions and development for William Lyon Homes.

Of course, that last cycle which ended with Great Recession is still a haunting reminder of what went wrong with subprime mortgages and real estate speculation.

But this cycle is different with stricter lending standards and real estate growth more measured in metro Phoenix.

Roger Gannon, Division President of Woodside Homes, told more than 900 attendees at Belfiore Real Estate Consulting’s annual AZ Dealmakers event, that buyers in this cycle are legitimate.

“They are coming with real down payments, real mortgages,” Gannon told a housing panel at the event moderated by Rose Law Group founder and president Jordan Rose.

Jordan Rose moderating AZDealmakers “Housing Super Panel”

Jason Weber, Vice President of Land Acquisitions and Development Chairman for Maracay Homes, said he has seen more sustainable growth in this current economic and real estate cycle as more to past ones.

The regional housing market ended 2019 with strong demand and new homes sales up compared to the previous year, according to Jim Belfiore, president of Belfiore Real Estate Consulting.

Belfiore said the opening of the South Mountain Freeway connecting Laveen and the West Valley to the East Valley (bypassing downtown Phoenix) will open more West Valley submarkets to growth.

Belfiore is also seeing upticks in growth for areas along the Loop 303 freeway in the West Valley and Queen Creek / Hunt Highway areas gaining as submarkets such as Gilbert and Chandler get built out.

The wild card for the economy, consumers and the real estate market may sit with the 2020 Elections and the prospects for a progressive Democrat such as Bernie Sanders or Elizabeth Warren.

But that impact (including a Trump reelection) would not be felt until 2021.

Economist Elliott Pollack told the AZ Dealmakers event he doesn’t expect a recession or slowdown this year. Pollack said the current economic expansion, which is the longest in U.S. history and its 127th month, is nearing its natural business cycle end.

But Pollack expects the next slowdown to be brief and less painful than the Great Recession a decade ago.

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