A growing economy helped transform Tucson over the past decade, aided by infrastructural improvements such as the streetcar and an explosion of successful small businesses. While it looks like the next few years will see similar growth, a possible economic storm may be approaching.
According to economic forecasts from Eller College’s George Hammond, Tucson is poised to grow, though at a slower rate than we’ve seen recently. Hammond predicts that Tucson’s job growth will decrease to .9% in 2020, compared to 1.2% in 2018.
In addition to slowing growth, Hammond warned of a few potential challenges ahead. While he didn’t predict a recession, he advised being on the lookout for a “more significant slowdown.”
The upside is that slowdowns are temporary. Hammond forecasts that Tucson’s economy will bounce back in 2022 once the potential storm passes. In the meantime, it’s best to heed his advice and keep an eye on potential challenges ahead to keep us protected from the storm.
Housing Prices Up, Inventory Down
To start with some good news for homeowners, Tucson housing prices continue to rise, enabling owners to recoup losses from the last recession. According to Tucson Local Media, median home prices in Tucson grew by 8% over last year and don’t appear to be slowing down.
At this year’s inaugural Oro Valley Chamber of Commerce Economic Outlook Luncheon, Tucson Association of Realtors CEO Randy Rogers announced that the average listing price in the city reached $258,141 in 2018, passing pre-recession figures for the first time since 2008.
While the increase certainly indicated good news for homeowners, Rogers cautioned that the number of available homes remains a challenge, with housing inventory growing just 7% last year.
While low housing inventory creates a great seller’s market, it can also see some homeowners, such as young families and first-time buyers, get priced out of the market.
At the luncheon, Rogers emphasized the importance of affordable housing for a community’s health. Affordable housing helps create more of a connection between those who live and work in the community by benefitting teachers, nurses and firefighters to “live in that community and thrive as well.”
The Baby Boom Approaches
A new study from RentCafe found that three Tucson area codes occupy the top 10 areas with the highest percentage of baby boomers in the US. As the city’s baby boomers age into retirement, a potential population challenge could take hold if we don’t take steps to replace the workforce with the younger generation.
Hammond also sounded the alarm over Tucson’s aging population at the Economic Outlook Luncheon. He said that addressing the population problem requires Tucson to “significantly improve its ability to attract and retain highly educated workers.”
Attracting tomorrow’s workforce means investing in the businesses of the future to spur the growth needed to keep our students in the city. And it doesn’t just mean jobs. We must also invest in the quality of life and infrastructural improvements that help make Tucson a twenty-first century city where young people want to live and raise families.
Judging from the available economic projections, it looks as though Tucson is ready for more growth in the coming years. While a potential economic slowdown may challenge us, if the last few years have taught me anything, it’s the strength of Tucson’s business community to weather a storm.
Mike Trueba, CCIM is Vice President, Business Banking for Vantage West Credit Union, a $2 billion financial institution, which serves a growing Membership of nearly 160,000 via retail locations across Arizona and online channels. Vantage West offers consumer and business banking services, and is federally insured by NCUA. VantageWest.org