Trump’s wall and Tucson Real Estate.

admin   December 5, 2016   Comments Off on Trump’s wall and Tucson Real Estate.

No one has any idea if the United States is actually going to build the Great Mexican Wall. However, even if the Wall doesn’t get built we’d expect border security to tighten over the next four years. How will this affect Tucson real estate prices?

3D rendering of the flags of USA and Mexico on woven fabric texture.

What does the Tucson real estate market look like in 2016?

Our simple answer is not great. Median home prices have decreased by over 18% over the last 10 years. The real estate picture gets a little less depressing if you look at median home prices over the last 5 years, which show an appreciation of 3.5%. Don’t get too excited though, nationally homes have appreciated over 16% over the last 5 years. In comparison to national averages the Tucson real estate market is worse off. How can this be?

What’s hurting Tucson real estate prices?

There are two big factors that we feel are hurting Tucson the most: unemployment and crime.

The unemployment rate in Tucson is 6.1% compared to the national avg of 5.2%. High unemployment never helps housing prices, but this coupled with slow job growth leads to market stagnation. Job growth over the last 12 months in Tucson is less than 1%. Tucson has high unemployment and almost no job growth. Both of these factors have helped derail any real estate market improvements.

Tucson and Crime

A high crime rate is also dragging down Tucson real estate prices. The FBI tracks violent and property crimes, rating them on a scale of 1-100 ( from low crime to high crime). Crime rates in Tucson are higher than national averages for both violent and property crimes. The national average is 31 for violent crimes and 38 for property crimes. Tucson scores a 58 in violent crimes and a 70 in property crimes. High crime rates coupled with high unemployment rates have kept the brakes on Tucson real estate prices, which begs the question of whether a decrease or a perceived decrease in crime will help real estate in Tucson.

Positive influences on Tucson real estate.

Tucson real estate has had a tough time of it in the last ten years. Median home prices are down close to 20% and both high unemployment and high crime rates have contributed to decreasing home prices. However things aren’t all bad in Tucson. It’s pretty hard to complain about the weather most of the year, which has made Tucson a mecca for those who worship the sun.

The great weather in Tucson had led to 31% population growth since 2000. However, Tucson still has low population density. The current population density of Tucson is just over 2000 people per square mile. In comparison the population density of Phoenix is over 3000 people per square mile. The increased population density in Phoenix has led to increased demand for housing, pushing the median home price up over 16% in the last five years. In comparison the median home price in Tucson is up less than 4% in the last five years. The Tucson real estate market is going to need more demand if it is going to recover. Increasing population will create this demand.

Will Trump’s Great Wall help Tucson?

The immediate answer is maybe, in the short term.

The construction of the Wall would create thousands of short-term jobs. This will significantly help Tucson labor markets. The Wall will create local jobs and serve as an incentive for people to move to the area. These jobs might not be around forever but in the short term it will increase employment and population. Hopefully once people come they’ll stay.

The impact of the Wall on crime rates is more of an unknown. Our guess is that crime rates would remain about the same. Although some Trump fans might anticipate lower crime rates, the increased population density from the influx of labor to build the wall coupled with the question of what happens after those short-term jobs are terminated might have the opposite effect.

What about Tucson’s demographics?

When I think of Tucson, I think of seniors, sun, and golf. However the numbers don’t indicate a large senior population. The median age in Tucson is 33. In comparison the median age in the US is 37. To grow its population Tucson needs to attract more retirees and older Americans.

Tucson benefits for retirees:

  • Great weather, with an average of 286 days of sun a year.
  • Golf–there are over 40 golf courses in the Tucson area.
  • Low cost of living, at 4.8% lower than the national average.
  • Low real estate costs.

We’d argue that one of the primary reasons that the senior population in Tucson is not larger is because of a perceived lack of security in the area. This perception is most likely tied to relatively high crime rates, assumptions regarding the area’s proximity to Mexico, and heavy reliance on Fox News as a news source. In some people’s minds Trump’s Wall helps solve both of these issues. The Wall may well have a positive impact on senior population growth if seniors feel more secure once the Wall has been installed. Whether or not it would actually increase security is a different matter. This last election showed us that fact and fiction are often at odds, and that fiction often prevails. In addition, if there was an increase in the senior population, there might be a corresponding off-set by a decrease in the Latino population.

Tucson’s demographics: the Latino population.

Over 42% of Tucson’s population is Latino. The area is closely tied to Mexico in proximity and demographic make-up. Building the Wall along the border with Mexico will not have a positive impact on US/Mexican relations. It’s impossible to play out all the possible scenarios but we’d anticipate a negative impact on the Hispanic population. We also feel that this negative impact would outweigh any positive impact on retirees moving to the area. It’s impossible to flesh all these numbers out but we’ll get to see first hand what the future holds. Hopefully Trump won’t build a Wall and will instead use US resources to improve education, increase access to quality health care, and to fight global warming. If he does build the Wall, Tucson will be at the vanguard of whatever impacts it will have on the rest of the United States, and the world.