Caution! Home buyers! Possible price correction coming to Phoenix! (Tucson: rental car, credit card)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I don't quite understand why people are under the impression that only >~$18hrly jobs are being impacted by the pandemic? I don't know where to find a reasonable representation of data across industries, but PLENTY of white collar jobs were terminated / furloughed and I expect that far more of those "temporary" layoffs will turn out to be permanent...and other impacts as most corporations will be reluctant to renew contracts or make any new purchases - B2B companies will be in serious trouble and the fallout of the lost revenue may not be felt for 6-18months as companies burn through their available cash runway
I don't know enough about real estate to comment, but to think that this is just impacting retail and hospitality industry buyers is really not an accurate portrayal of who is being impacted. There is the immediate term risk sectors (eg restaurants, air travel, hotels, retail, child care, etc), and there is the slow burn happening behind closed doors across many industries that likely isn't conspicuous enough for anyone to take notice, unless it happens to be YOUR industry. Of course the most vulnerable workforce is in a dire situation....doubt many of them were home buyers anyways
I work in healthcare and I can tell you that the industry is being hit from all angles and is being gutted - the CARES Act doesn't even begin to match the losses - even the largest healthcare systems are vulnerable and some are losing billions / laying off thousands, esp non-clinical and many precious "White collar jobs" / furloughs / EXECUTIVE salary cuts / suspending retirement contributions - you NAME IT they are desperate to cut costs.... (BTW some of these systems happen to be the largest employers across states that aren't government) - as healthcare accounts for ~18% of GDP, this should raise concerns for economic stability ---> this also includes medical diagnostics, ambulatory care centers, primary care, specialty care ----> the impact will be palpable and surely will not go away just because stay at home orders are lifted....esp in rural communities, smaller hospitals will likely go bankrupt and may be the only non ~$18 an hr employers around....
Additional industries I suspect (can confirm some others are speculation) are at serious risk:
- Academic institutions (medical / research centers, colleges, etc) ---> huge losses in tuition, many staff / faculty are not even full-time / extremely vulnerable --> tenured teaching positions are a thing of the past
- Commercial real estate / construction ---> suspect thousands of companies will also end contracts for office space as it is main overhead for many in urban environments (outside of salary) and orgs move to a remote workforce
- Auto manufacturing / US based manufacturers ---> as we saw with Swine Flu epidemic, short term orders for PPE production will dry up immediately after Chinese manufacturing is available / contracts are up for renewal ---> car manufacturers are already amongst lists of companies with highest number of layoffs
- Thousands of layoffs of Silicon Valley / tech industry, VC-backed start ups laying off (many industries impacted)
- Newsroom / News Media - massive layoffs ---> almost half of the "newsroom" was slashed bc of COVID-19
- "Big Law" / Legal firms ---> nearly every major law firm is minimally reporting pay cuts, thousands of layoffs and pay cuts for partners / executives ---> one of the largest multi national "untouchable" lay firms failed to make their rent for their fancy offices first time ever
- Public sector going to be the next wave is my guess
- Also curious to see about what happens to big consulting firms...who the heck is going to spend $$$$ on arduous consulting engagements when they can barely scrape by?
Last edited by annagene12; 05-13-2020 at 01:49 PM..
I don't quite understand why people are under the impression that only >~$18hrly jobs are being impacted by the pandemic? I don't know where to find a reasonable representation of data across industries, but PLENTY of white collar jobs were terminated / furloughed and I expect that far more of those "temporary" layoffs will turn out to be permanent...and other impacts as most corporations will be reluctant to renew contracts or make any new purchases - B2B companies will be in serious trouble and the fallout of the lost revenue may not be felt for 6-18months as companies burn through their available cash runway
I don't know enough about real estate to comment, but to think that this is just impacting retail and hospitality industry buyers is really not an accurate portrayal of who is being impacted. There is the immediate term risk sectors (eg restaurants, air travel, hotels, retail, child care, etc), and there is the slow burn happening behind closed doors across many industries that likely isn't conspicuous enough for anyone to take notice, unless it happens to be YOUR industry. Of course the most vulnerable workforce is in a dire situation....doubt many of them were home buyers anyways
I work in healthcare and I can tell you that the industry is being hit from all angles and is being gutted - the CARES Act doesn't even begin to match the losses - even the largest healthcare systems are vulnerable and some are losing billions / laying off thousands, esp non-clinical and many precious "White collar jobs" / furloughs / EXECUTIVE salary cuts / suspending retirement contributions - you NAME IT they are desperate to cut costs.... (BTW some of these systems happen to be the largest employers across states that aren't government) - as healthcare accounts for ~18% of GDP, this should raise concerns for economic stability ---> this also includes medical diagnostics, ambulatory care centers, primary care, specialty care ----> the impact will be palpable and surely will not go away just because stay at home orders are lifted....esp in rural communities, smaller hospitals will likely go bankrupt and may be the only non ~$18 an hr employers around....
Additional industries I suspect (can confirm some others are speculation) are at serious risk:
- Academic institutions (medical / research centers, colleges, etc) ---> huge losses in tuition, many staff / faculty are not even full-time / extremely vulnerable --> tenured teaching positions are a thing of the past
- Commercial real estate / construction ---> suspect thousands of companies will also end contracts for office space as it is main overhead for many in urban environments (outside of salary) and orgs move to a remote workforce
- Auto manufacturing / US based manufacturers ---> as we saw with Swine Flu epidemic, short term orders for PPE production will dry up immediately after Chinese manufacturing is available / contracts are up for renewal ---> car manufacturers are already amongst lists of companies with highest number of layoffs
- Thousands of layoffs of Silicon Valley / tech industry, VC-backed start ups laying off (many industries impacted)
- Newsroom / News Media - massive layoffs ---> almost half of the "newsroom" was slashed bc of COVID-19
- "Big Law" / Legal firms ---> nearly every major law firm is minimally reporting pay cuts, thousands of layoffs and pay cuts for partners / executives ---> one of the largest multi national "untouchable" lay firms failed to make their rent for their fancy offices first time ever
- Public sector going to be the next wave is my guess
- Also curious to see about what happens to big consulting firms...who the heck is going to spend $$$$ on arduous consulting engagements when they can barely scrape by?
I have only lived here for 4 months, from Northern IL, where house values weren't exactly shooting upwards. I think there is a trend that people want to come here to Phoenix and that trend was paused by the virus, but the energy to come is still out there. It looks like the market here slowed as the virus set in, from multiple offers to just single offers on houses. I think that is already picking up again, subject to some fallings out where a buyer loses a job. I am looking to buy and can envision scenarios where prices take a downward trend for a bit. But I think the underlying interest in the area will set things back in the upward direction after a while and for a while.
I have multiple out-of-state clients who are waiting to move here once this all passes. The market will do what it wants to do, but there is still a high demand of people wanting to move here. Only time will tell.
Not sure what happened to my response on this one yesterday - maybe got lost in the "move" as it was about the same time.
Anyway, who knows for sure of course - but today I heard some interesting items.
1. Businesses may NEVER return to the tall corporate towers as they have learned that workers can be as productive from remote locations. Twitter is as much as saying this for their entire staff, and other large corporate companies are saying that substantial percentages of their people may work remotely from now on. This transition was already in progress due to the high costs of major metro area housing.
2. Add to #1 the belief from some that this actually may be a time the "burbs" thrive for awhile as many don't like the density risk, and then the small spaces they were required to shelter at home in - the search activity on the main realty sites is all out of the city into the burbs/rural area - again, especially combined with #1.
3. Manufacturing and Logistics and agriculture and industry will all be businesses that require actual at location work - and those tend to be placed in more outlying areas.
These and others lead me to believe the answer to the (recent since this is now all mixed into an old post) question is that places like Casa Grande, SanTan Valley, and other less expensive locales may do well for awhile. As someone mentioned about Buckeye above - here in CG the Lucid Motors factory is being built full bore, the Nikola Semi Truck plant is still on schedule for groundbreaking this year, our Gasoline refinery is moving ahead in the planning stages as well as several mining operations coming back to life.
In my neighborhood which was a partially completed "zombie" subdivision from last decade - houses are being built/sold at a fast clip.
I don't quite understand why people are under the impression that only >~$18hrly jobs are being impacted by the pandemic?
I'm not. I was pointing out that if annual income was somehow the litmus test of what areas are going to be in trouble, then by definition, Tempe (the person I was responding to) should worry more about his town. Basically, I was pointing out the irony. Yes, multiple industries are going to get ROCKED. I'm well aware of what is happening to hospitals. One of my customers runs a massive healthcare company business unit that is a household name. We talked last week. He said they are going to give companies back $$'s. He also said they are paying through the nose for medications (people like myself have been hoarding meds: I have a year supply on BP and cholesterol meds). That means that everyone is taking it on the chin. As you said, my son said even Harvard Medical School is feeling it.
And dentists are also getting NAILED. Our daughter was going to separate from the military as a dentist. Her pending employer said she had to pay $175K in wages. And a MASSIVE amount of pending overhead has to be installed like Hepa filters. The ADA said as much as 25% of the dentist practices are going to shut down. So she signed up in the military for another year. Of course, sitting on their hands. Meanwhile, dentists are coming out of dental school with an average debt at close to $300K https://www.studentdebtrelief.us/new...l-school-debt/ . It's going to get rough out there!
Same here in Surprise (the small number of houses are fetching top $$'s). As a side note, according to City-Data, Tempe's household income is $51,900. Surprise is $66,000. Your right, those $18 an hour Tempe residence are in trouble. I bet as much as 1/4th of the Surprise residents in retirement are snowbirds (many of which are not counted in the population). If social security goes away, I suppose the town has a lot to worry about.
Quote:
Originally Posted by annagene12
I don't quite understand why people are under the impression that only >~$18hrly jobs are being impacted by the pandemic? I don't know where to find a reasonable representation of data across industries, but PLENTY of white collar jobs were terminated / furloughed and I expect that far more of those "temporary" layoffs will turn out to be permanent...and other impacts as most corporations will be reluctant to renew contracts or make any new purchases - B2B companies will be in serious trouble and the fallout of the lost revenue may not be felt for 6-18months as companies burn through their available cash runway
I don't know enough about real estate to comment, but to think that this is just impacting retail and hospitality industry buyers is really not an accurate portrayal of who is being impacted. There is the immediate term risk sectors (eg restaurants, air travel, hotels, retail, child care, etc), and there is the slow burn happening behind closed doors across many industries that likely isn't conspicuous enough for anyone to take notice, unless it happens to be YOUR industry. Of course the most vulnerable workforce is in a dire situation....doubt many of them were home buyers anyways
I work in healthcare and I can tell you that the industry is being hit from all angles and is being gutted - the CARES Act doesn't even begin to match the losses - even the largest healthcare systems are vulnerable and some are losing billions / laying off thousands, esp non-clinical and many precious "White collar jobs" / furloughs / EXECUTIVE salary cuts / suspending retirement contributions - you NAME IT they are desperate to cut costs.... (BTW some of these systems happen to be the largest employers across states that aren't government) - as healthcare accounts for ~18% of GDP, this should raise concerns for economic stability ---> this also includes medical diagnostics, ambulatory care centers, primary care, specialty care ----> the impact will be palpable and surely will not go away just because stay at home orders are lifted....esp in rural communities, smaller hospitals will likely go bankrupt and may be the only non ~$18 an hr employers around....
Additional industries I suspect (can confirm some others are speculation) are at serious risk:
- Academic institutions (medical / research centers, colleges, etc) ---> huge losses in tuition, many staff / faculty are not even full-time / extremely vulnerable --> tenured teaching positions are a thing of the past
- Commercial real estate / construction ---> suspect thousands of companies will also end contracts for office space as it is main overhead for many in urban environments (outside of salary) and orgs move to a remote workforce
- Auto manufacturing / US based manufacturers ---> as we saw with Swine Flu epidemic, short term orders for PPE production will dry up immediately after Chinese manufacturing is available / contracts are up for renewal ---> car manufacturers are already amongst lists of companies with highest number of layoffs
- Thousands of layoffs of Silicon Valley / tech industry, VC-backed start ups laying off (many industries impacted)
- Newsroom / News Media - massive layoffs ---> almost half of the "newsroom" was slashed bc of COVID-19
- "Big Law" / Legal firms ---> nearly every major law firm is minimally reporting pay cuts, thousands of layoffs and pay cuts for partners / executives ---> one of the largest multi national "untouchable" lay firms failed to make their rent for their fancy offices first time ever
- Public sector going to be the next wave is my guess
- Also curious to see about what happens to big consulting firms...who the heck is going to spend $$$$ on arduous consulting engagements when they can barely scrape by?
For the record I said median income. Which means 50% of residents in the Phoenix metro (it’s metro data not subdivided amongst cities, also median does not mean average) had some kind of income of $18/hr equivalent or less. With soaring unemployment rates now because of the pandemic, it’s lower now not simply because only $18+/hr jobs or only minimum wage jobs are being affected, but because more are unemployed across the board and getting little to no income at all and if they are, probably to an amount of less than $18/hr. So the 50% median income in Phoenix metro could be hypothetically closer to $12/hr, meaning 50% of all metro residents are earning closer to minimum wage than before, assuming they are receiving unemployment benefits. Many are not able to file for unemployment still.
Tempe has always been a reliable market because of rentals to ASU and it’s central location to employment and city amenities. It will always be a stronger market than Surprise. Nonetheless Tempe and Surprise both need to take hits to their housing costs, it’s ridiculous here. A ~1000 sq ft house in my neighborhood should not be selling for 300k in such a short time that’s absurd. And whatever house prices are in Surprise, they are probably inflated too.
1. Businesses may NEVER return to the tall corporate towers as they have learned that workers can be as productive from remote locations. Twitter is as much as saying this for their entire staff, and other large corporate companies are saying that substantial percentages of their people may work remotely from now on. This transition was already in progress due to the high costs of major metro area housing.
2. Add to #1 the belief from some that this actually may be a time the "burbs" thrive for awhile as many don't like the density risk, and then the small spaces they were required to shelter at home in - the search activity on the main realty sites is all out of the city into the burbs/rural area - again, especially combined with #1.
Seeing a LOT of this with my clients and partners. Some old school managers are going to want "butts in the seat" but a majority of business owners that can disperse their employees are doing so. Talking with some of those business leaders over the past month or so and almost all of them are marveling at how much more productive their workforce is, most projects and initiatives coming in before their deadlines. Most have talked about downsizing their real estate footprint and give employees the option to work from home or at least telecommute most of the time.
Add in the benefits we are seeing for the environment and a "socially conscious" employer may see it as a benefit as well.
There is some downside to this...the old adage of "out of sight, out of mind" tends to come true so if you are bucking for a promotion it can be more difficult to network with the necessary people. Also there is talk on some professional social media that if you are working from home, it should entail a pay cut as you now have more disposable income from not paying for gas, parking, laundry, wardrobe, etc. I have called shenanigans on that multiple times and called out the business leader for being a self-absorbed so and so (or something that rhymes with Nick) thinking that their employees are now somehow worth less while they are saving money on operating expenses.
Anyway...relating to Real Estate...if we are all (or over 50% or so) now more free to live wherever we want and proximity to a workplace no longer matters, it opens up a lot of possibilities. Will urban areas empty out? I am sure some will leave but there are folks that like that lifestyle. NYC is seeing a small exodus of people moving out of the city. Maybe others will too. Time will tell but in the meantime...my home value (at least on the real estate sites) has gone up 5% over the past couple of months.
Seeing a LOT of this with my clients and partners. Some old school managers are going to want "butts in the seat" but a majority of business owners that can disperse their employees are doing so. Talking with some of those business leaders over the past month or so and almost all of them are marveling at how much more productive their workforce is, most projects and initiatives coming in before their deadlines. Most have talked about downsizing their real estate footprint and give employees the option to work from home or at least telecommute most of the time.
I'm hearing the same thing ^^. Especially in the high rent districts (Bay Area, Miami, southern CA etc. )
Tempe has always been a reliable market because of rentals to ASU and it’s central location to employment and city amenities. It will always be a stronger market than Surprise. Nonetheless Tempe and Surprise both need to take hits to their housing costs, it’s ridiculous here. A ~1000 sq ft house in my neighborhood should not be selling for 300k in such a short time that’s absurd. And whatever house prices are in Surprise, they are probably inflated too.
In addition to my above comments about business changes - I am VERY curious to see how much education changes as well. Is the "experience" as needed as we once believed? Or can it be done just as effectively, and MUCH cheaper, remotely. Already the California State system is cancelling another in person semester.
Of course sports and other activities can still be provided - but do we need big, expensive to maintain, physical campuses with dorms etc. in the future?
Some of this was also changing prior to the pandemic.
I'm hearing the same thing ^^. Especially in the high rent districts (Bay Area, Miami, southern CA etc. )
I hope the governments are preparing for the property tax issues (as well as the eyesore of so many empty buildings, nothing worse than commercial spaces that once housed decent businesses reduced to seasonal costume shops or fireworks stands in the parking lots).
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I bet as much as 1/4th of the Surprise residents in retirement are snowbirds (many of which are not counted in the population). If social security goes away, I suppose the town has a lot to worry about.
