Economic growth across the nation is expected to take a dip in the coming decade as the population ages and the Baby Boomer generation moves closer to widespread retirement, removing a significant portion of spending power and cash flow from the market.
The Greater Tucson Metro Area is no better prepared than anywhere else in the U.S. for that coming change, and the aging population is one of the major indicators economic forecaster George Hammond will keep an eye on in the coming years.
Hammond, the director of the University of Arizona Eller College of Management Economic and Business Research Center, spoke as a guest of the Greater Oro Valley Chamber of Commerce at the organization’s inaugural Economic Outlook Luncheon, held last Thursday at the El Conquistador Tucson, A Hilton Resort.
One of four guests to share the stage with chamber president and CEO Dave Perry on May 9, Hammond shared his insight on the general economic condition of the nation, the Tucson region and the Oro Valley/North Tucson community.
Hammond delivered positive news to the assembled crowd of business owners, elected officials and chamber members: The national economy is doing “great,” gross domestic product is up year over year, jobs are being generated at a rapid pace and unemployment is at its lowest level in 50 years.
“The national economy is firing on all cylinders,” Hammond said.
The Eller economist said he expects positive growth to hold through 2019, though at a slightly slower pace than last year, and continue to decelerate into 2020.
The national housing market sits on equally strong footing for the time being, according to Tucson Association of Realtors CEO Randy Rogers, the luncheon’s second guest.
Rogers said that lower-than-expected mortgage rates and roughly 7 percent increase in overall inventory has allowed buyers the opportunity to catch their breath while still creating a favorable market for sellers.
Depending on the region, Rogers said to expect between 3 to 5 percent of growth in the national market over the year.
The positive news wasn’t limited to the national economy, and both Hammond and Rogers spent time with Perry discussing the current market conditions throughout the Greater Tucson Metro Region, Oro Valley and the northern portions of Tucson.
While Tucson was able to generate roughly 4,000 new jobs last year—accounting for just over 1 percent growth—the region is still working at a slower pace than the nation, the State of Arizona or the Phoenix Metropolitan Area.
Tucson’s job market and economy are on par with recent growth, though Hammond added that the aging population and the national slowing economy will be felt in Southern Arizona. Recession risks will begin to elevate in 2020, though Hammond said he wasn’t predicting a recession, but instead wanted to reiterate that growth will slow and that people should be on the lookout for a “more significant slowdown” in the coming years.
The Tucson housing market is living through its own renaissance, Rogers said, finally seeing a return to pre-recession figures. By the end of 2018 the average list price for a home was $258,141, eclipsing $254,247 in 2008. As for sales prices, the 2008 average of $242,006 was passed last year by an average of $252,481.
“This is really significant for the Tucson market,” Rogers said.
While statistics paint a positive picture, Rogers said that inventory does remain a challenge throughout the region. Even with national builders putting up homes in Tucson, many local builders folded or left as a result of the 2008 downturn, putting the local inventory in a bind.
Known for its higher home values, income, and growing population, the Oro Valley region is poised to ride higher on the wave of economic success than its counterparts—a position of relative success Hammond said can be directly attributed to the population’s higher-than-average level of academic achievement, high household income and the low levels of poverty.
In Oro Valley, nearly 47 percent of residents have an undergraduate degree. That’s compared to 30.6 percent in the United States, 32.9 percent in Arizona and 29 percent of the population in Tucson. According to Hammond, that achievement gap is maintained across younger generations as well, boding a positive future for the town.
When asked why the northwest region is so relatively successful, Rogers added that Oro Valley is “a tremendous community to be in” because of its dedication to infrastructure, parks and recreation, and the job market, and because of the high performing schools in the region.
Receiving honors like “Safest City” in Arizona don’t hurt either, Rogers added.
While Oro Valley is known for its higher home values and levels of attainment, Perry did question Rogers on the importance of affordable housing, and what place it has in the town.
While many people conjure images of Section 8 housing and government subsidies when the term “affordable” is used, Rogers said that affordable housing in any community is an important part of the development conversation for any municipality looking to create a diverse “richness” of culture and economics within its boundaries.
“Affordable housing is the ability for a worker who lives in this community—maybe it’s a teacher, maybe it’s a government worker, maybe it’s a firefighter or a nurse—that they can live in that community and thrive as well,” Rogers said.
Housing, finding jobs and getting used to a new community was the topic of discussion for the event’s final two guests, Erinn Oller and Sarah Morris. The former is the chief administration officer at Oro Valley Hospital, the latter in the general manager for Power & Motion, Tucson Airframe Systems (known locally as Securaplane).
Both of the women are relatively new to Oro Valley, having moved to the area in the last few months, and shared their insights from an outsider’s perspective. Both expressed a difficulty their companies can have in finding talent, especially at the hospital, where service and core staff work for median wages and often don’t live in Oro Valley.
Oller and Morris both brought their families and spouses along with them for their new jobs, and expressed a desire in finding a way for trailing spouses to more quickly find work, whether it be through a program or local chamber of commerce.
At the end of the luncheon, Perry took a moment to recognize chamber vice president and events director Alex Demeroutis, who ended her tenure with the organization last Friday.
“I tell people that hiring Alex was the best move I ever made at the chamber, and I believe that to be true,” Perry said.