Investing in Land

Is it possible the ancient proverb about big things starting out small is taking root in Arizona?

Just this week, the economic prospects in the Grand Canyon State have been painted in dark colors.  A state budget crisis was described this way by the New York Times:

“Arizona finds itself in a worst-case scenario among states that have been hammered by the foreclosure crisis. One of the fastest-growing areas in the country for years, the state has seen its population — and needs — explode over the last decade, and development has more than helped cover the costs…With the number of new building permits plummeting, revenues from the big-ticket items associated with new homes, which had fueled much of the state’s budget in recent years, also fell.”

Less dark but still a mixed bag was a report from MDA DataQuick, the San Diego-based real estate analyst firm.  It reports that even though “Existing home and condo sales in the Phoenix area soared in June to the highest level seen in that month in four years…The level of newly constructed homes sold in the area has declined 50% from June 2008.”

The brightest data points may be those appearing earlier in the development pipeline.  Six months ago I saw a report from Walton International, the Canada-based raw land investment company, that its investment in Arizona in unabated.  According to the release, “Arizona has been and is expected to continue being one of America’s strongest economic regions, supported by long-term fundamentals in employment, population, economics, and housing affordability.”

Strong words and strong moves.  If Arizona’s governor can hold out, she may get rescued by the cavalry coming from Calgary.

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