Arizona Limits Construction Around Phoenix as Its Water Supply Dwindles

[Eugene Fedotov]

Just wander if anyone has an opinion how this will affect real estate prices

https://dnyuz.com/2023/06/01/arizona-limits-construction-around-phoenix-as-its-water-supply-dwindles/

[Chris B.]

I'm guessing it won't stop the general upward pressure on values and rent.  Migration to the area and the population boom in the valley hasn't stopped and there is no indication it will any time soon.  Here in the SE valley, construction of new units are still going full speed ahead too.  New large business buildings are going up everywhere.  Per the article, the construction may slow down, but with the iffy water rights swapping going around between municipalities an rights holders, I don't see a significant impact in the near future.

Should it slow down?  Probably yes as no-one wants to run out of water.  There are just a lot of legal loopholes at the moment that will need to be resolved before the slow down effort gets some teeth.

[Chad McMahan]

Quote from @Eugene Fedotov:

Just wander if anyone has an opinion how this will affect real estate prices

https://dnyuz.com/2023/06/01/arizona-limits-construction-around-phoenix-as-its-water-supply-dwindles/

Prices in AZ will rise.
Less supply of new homes, and continued increase of demand, as people move to Phx and AZ.

[Jeffrey Daniels]

Water supply around Phoenix is not dwindling, those are sensational headlines that many people are going to believe though. Over the past few years I've attended several presentations by water experts that have spent their entire careers studying this topic, they care more about the science than the economics... water nerds. Yes, we need sustainable development and conservation practices or we will be in trouble - but for the foreseeable future Phoenix is in very good shape.

Arizona's new Governor is in her first year, and she was elected to replace a very pro- development predecessor - so Arizona politics are different than they were over the past decade. It's important to know the boring stuff happening at the Capital, vs. those delicious click bait headlines.

IMO: there is already more approved development than what could actually be built over the next decade - there will be plenty of new home supply. However aside from smaller infill projects, those homes are not in "Phoenix" proper. They are creating new cities on land that is less expensive to aquire and develop than our urban core - 20 years ago they called it "sprawl". Nobody wanted to live there 100 years ago when they could have built anywhere, and not much has changed, except builders gonna build profit.

I believe organic home appreciation in Phoenix will continue to outpace inflation. Property may not double in value every 3 years like it has, but that was a correction based on municipalities planning and investment. I say "organic", because we have a lot of homes here that have been poorly maintained and/or terribly renovated - and many people were encouraged to pay well over appraisal values. If that home sells for less two years later, that's not a natural decline or crash.

Choice homes in choice Phoenix neighborhoods that are priced appropriately will have multiple offers opening weekend.

if you're sitting on a doozy off a busy street with peeling paint, busted roof, struggling HVAC, and cast plumbing - yeah, you're not setting any sales records compared to when rates were 3%.

You could say I remain bullish on Phoenix.

[Justin Brin]

@Jeffrey Daniels In your opinion you don't think there will be an issue with water supply?

[Jeffrey Daniels]

Quote from @Justin Brin:

@Jeffrey Daniels In your opinion you don't think there will be an issue with water supply?

Based on the information I've seen from experts - I do not. Water in the Southwest is a decades-old conversation that as our population has continued to grow - many people are just being made aware of, and it's unbelievably political. Of course, conservation is necessary and most stakeholders are improving water use efficiencies. Still, the Phoenix area has an incredible history of accomplishing what seemed like impossible solutions to growth and development in the desert.