Arizona 2012 Forecast: Still Sick, But Recovering

If Arizona’s economy were a hospital patient, she would be out of intensive care, but still in the hospital. In other words, the economy is doing better and certainly on the road to recovery, but it isn’t recovered yet. And the patient is not likely to feel healthy again for another couple of years: the economy won’t be back to normal until at least 2015 or so. That was the assessment shared by Lee McPheters , director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business, and real estate expert Elliott Pollack, president of consulting firm Elliott D. Pollack and Company. The two gave their patient prognoses December 7 at the 48th Annual Economic Forecast Luncheon, co-sponsored by the economics department at the W. P. Carey School of Business and JPMorgan Chase. Arizona’s real estate market: “agonizingly slow” recovery Arizona’s real estate market, said Pollack, will continue its “agonizingly slow recovery” in 2012, which is likely to be better than 2011. “You don’t go from having a heart attack to running a marathon overnight,” Pollack explained. “The problem is on its way to being resolved, but it’s not resolved yet.” Elliott Pollack's slides Pollack said the root of the problem in the housing market is excess inventory -- and the solution will come from a depletion of that excess inventory. “Think of what’s going on in the housing market as what would be going on at any manufacturer or retailer who found themselves with a substantial oversupply of a product (in this case, 50-55,000 housing units in Greater Phoenix). The product would be put on sale. If it didn’t sell at a certain price, the price would then be lowered until the seller found a market clearing price.”

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