The Phoenix metro area ended 2014 with a 2.7 percent increase in total nonfarm employment. Growth occurred in most employment sectors, with particularly pronounced December-over-December changes in professional and business services and education and health services. These two industries alone accounted for over three-fifths of the total job growth for Phoenix in 2014. The region’s large construction sector continued its downward trend, with jobs numbers ending the year down by 3.6 percent. However, the anticipated stronger growth in high-paying sectors will help to reverse the trend of the city’s construction sector as millennials and boomerang buyers enter into the housing market.
Housing starts and prices have yet to regain their pre-recession levels. Conditions, however, are improving by many measures. Distressed sales composed almost 40 percent less of total units sold year-over-year for December. The number of days homes spent on the market increased in 2014, however inventory growth slowed. The area is moving towards a more normalized market, with institutional buyers slowing and traditional buyers finding their footing as the U.S. economy firms up. The region is still popular among second-home buyers and retirees, who will benefit from improving economic conditions over 2015. The continued decline of distressed property sales and foreclosures will help to stoke home prices in the upcoming years.
Reports on the net benefit of the Super Bowl have been mixed. However, even if the initial estimates were overblown, Phoenix still experienced a bump in consumer spending thanks to fans in town for the game. Phoenix will continue its moderate growth for 2015, but real estate prices and construction, key drivers to the area economy, will not be approaching pre-recession levels. Although Phoenix isn’t rebounding strongly, its sustainable growth and low cost of living will help to attract more business to the “Silicon Desert.”
Click here for the complete Phoenix Regional Economic Update: Phoenix2014_Q4.