(Disclosure: Rose Law Group represents Greenlight Communities.)
By RaeAnne Marsh | InBusiness Phoenix
“When the housing market is strong, typically economic growth is strong,” observes Randy Bury, who has more than 25 years’ experience in home building, land acquisition and development and is founder and owner of Moderne Communities®, an Arizona-based real estate investment and development company. “I believe approximately 65–70% of GDP is consumer spending, of which homebuilding and construction is the largest percentage of that spend — so the impact is significant.” Citing Automatic Data Processing, Inc.’s June report of approximately 497,000 new jobs and noting that 97,000 are in construction, he adds, “While other industries are experiencing layoffs or ‘right sizing,’ builders are hiring and they aren’t laying people off because it is tough to re-hire. It is also significant to note that housing starts are up year-over-year.”
From an economist’s point of view, it’s not the housing market that affects economic growth and the building of business, but, “It’s the inverse,” says Dennis Hoffman, Ph.D., professor in the economics department at Arizona State University’s W. P. Carey School of Business and director of its L. William Seidman Research Institute. It is economic growth and building of business that affect the housing market, and Dr. Hoffman points out that Phoenix and Arizona have been growth leaders for decades, magnets for people and new businesses. “With that ongoing influx, there is an unrelenting demand for housing,” he says, adding, “Historically, abundant land and affordable labor have kept costs low, so below-average housing prices did help promote the state as a great destination.”
While he believes housing costs have to impact at some level — such as people buying smaller homes and spending less on furniture and fixtures — Dr. Hoffman says growth appears to be strong in the state. “Significant business in-migration continues at a brisk pace.”
In the daily machinations of the market, however, housing does affect the economic picture.
For instance, John Carlson, president of Mark-Taylor Companies, the leading developer, owner, and investment manager of luxury multifamily communities in Arizona and Nevada, cites the Arizona Apartment Market Analysis that Elliot Pollack & Company produced in 2019: “It was estimated in 2018 that the apartment industry generated an annual impact of nearly 22,000 jobs, $695.9 million in wages and $3.8 billion in annual economic output each year.”
