Arizona Homes: No Boom-to-Bust Scenario
The Arizona Republic reports that a rising number of U.S. cities are in the midst of housing booms that could potentially become busts. However, federal banking regulators do not see evidence of any such conditions in Arizona.
According to the Federal Deposit Insurance Corporation (FDIC), "boom" markets are defined as those depicting 30 percent total price gains (inflation adjusted) during the past three years. While Arizona home prices rose about 30 percent from 2002 through 2004, the after-inflation gain was closer to 21 percent.
Some industry experts believe overly large increases are more prone to boom-to-bust outcomes. A recent boom list is dominated by cities in California, Florida, Nevada, New England and other portions of the East Coast.
William D. Hinz II, President of Western National Bank (Phoenix), believes the Valley housing market will remain in good shape, since buyer demand and population inflows will continue to drive sales of new units.
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