I attended the 39th Annual Economic Conference this past Thursday. It wasn’t my 39th, but was more than 10 for me. It’s a fine opportunity to gather information about the current condition of Flagstaff’s economy and the state’s outlook. Usually, the keynote speaker is worth hearing and that was true this year with Gene Sperling addressing national and international economic issues.
Much of the Arizona economy, for better or worse, is based upon the housing industry. As a result, the outlook for the state’s economic growth is slow, just like the housing industry. There are a variety of reasons for this, most of which I’ve blogged about over the past year:
- Demographics – the large baby-boomer generation has past its prime of home buying and for several years in the future there will be a much smaller group (the Millennials) in the prime age group for home buying. The good news is that the next demographic cohort is even larger than the Boomers, but they are several years out from their prime home buying years.
- Hang-over from the housing bust – Arizona has always benefited from people moving here after working and owning homes elsewhere. Those homes elsewhere often don’t have the kind of equity that allow for another home purchase, so people are not selling them and moving here.
- Tight credit – it’s not as easy to get a home loan as it used to be. That’s good, but we’ve probably swung the pendulum too far in the conservative direction. Slightly lower qualifying credit scores and loosing of the new liability standards for loan originators would be worthwhile steps.
The speakers agreed that inflation is not something to worry about for the foreseeable future and that interest rates will remain low for the next year.
Professor Ron Gunderson used the statistics I report here every month for his analysis of the Flagstaff housing market. You can see them under the category “Flagstaff Market Trends.”
Here’s a good report on the conference from Flagstaff’s local newspaper: Slow economy better than bubble.