Wednesday, April 25, 2012

Economy: Phoenix, Arizona - The Call Of The Desert

Yesterday we got news that U.S. home prices continued their fall. In February the S&P/Case-Shiller 20-city composite, which displays the development of home prices in 20 big U.S. cities, hit a near-decade low (.marketwatch). But one city shined:  Phoenix. Prices there were up 1.2% monthly. The capital of Arizona was the only city in the survey with back-to-back monthly gains — and up 3.3% annually.

This exceptional strength of the Phoenix home market seems natural for me. Last week my girlfriend and I visited the city while traveling through the U.S. southwest states Nevada, Utah and Arizona. We stayed 2 nights in the regional metropolis, one night in a hotel and the other
 in the home of friends.

I was impressed because Phoenix (wikipedia), which has around 1.5 million inhabitants, is built in the emptiness of the Sonoran Desert (wikipedia) and makes very generous use of the ample space there, called the Valley of the Sun. Arriving by car from the north we travelled at at least a half hour inside the boundaries of the metropolis and spotted still empty desert land. Sometimes we could see more of the famous Saguaro cactus (wikipedia) than houses.

We learned from our hosts that they and many other citizens prefer the extremely dry desert climate with warm winters and very hot summers (till 120 F, 49 C). We were told that many people who can not stand the humidity of the U.S. east coast and the gulf region or the bitterly cold winters in the northern U.S.and Canada migrate to this very sunny place. They also mentioned that the tax laws in Arizona are more friendly than in many other U.S. states. 

Phoenix therefore attracts many retired people who can extend their lifespans thanks to the healthy desert climate. And many large companies respond to the regional attractiveness and build their headquarters or large facilities there. Therefore the (relative) housing boom in the southern metropolis could last as long as the desert climate lasts.

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