Friday, September 21, 2007

Mixed messages for Arizona's economy

The housing boom has gone bust and there are worries that the whole economy of the state will go down with it.

It could take three to five years before the Arizona economy fully recovers from the current housing crunch, Valley economist and real-estate investor Elliott Pollack said Thursday.

"How do I define a full recovery?" he asked a packed ballroom at the Arizona Biltmore Resort & Spa. "Supply and demand is back to normal. We've absorbed that excess supply (of housing stock)."

Pollack estimated that an excess inventory of at least 40,000 homes exists in the Valley. Real-estate experts say decreasing that number by even 5,000 or 10,000 would improve the market dramatically.

On the other hand, the hotel industry in Phoenix is expanding at a rapid pace.

Hundreds of new hotels are rising across the USA as the lodging industry seeks to cash in on rising room rates and strong demand from travelers.

The number of hotel rooms under construction in July jumped 20% from a year earlier, a report from industry tracker Smith Travel Research shows. More than 196,000 rooms — more than 2,000 hotels — will open within two years. That's the highest number of new rooms in the pipeline in more than seven years.

With 6,041 new rooms, Phoenix comes in fifth on the list of places adding the most new hotel rooms (second in terms of percent of current supply.)

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