Could This Be The Popping Of Arizona's Bubble?

A story in today's New York Times headlined "In Arizona, 'For Sale' Is a Sign of the Times," shines a bright light on a dim scene in that state's housing market (where many California residents invested). The story also does some of the simple math regarding the rise in housing prices compared to wages.

Today, the number of unsold homes in the area has soared to almost 46,000 from just a few thousand in early 2005. And builders are pulling back as fast as they can.

They have little choice. Sales cancellations among big builders, not just here but around the country, are running as high as 40 percent, double the rate a year ago.

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Economists note that the construction sector, itself dependent on the housing boom, accounted for about a quarter of all new jobs created in the last six years. Lower-paying retail jobs added about 15 percent.

Wages rose, too, but not nearly as fast as home prices. In Maricopa County, which includes Phoenix and Scottsdale, median home values — half the homes are worth more, half are worth less — increased 64 percent, to $212,700, from 2001 to 2005, while the typical household’s income rose just 5 percent, to $48,711, according to the Census Bureau.

New homes cost more: the median price was $270,000 at the end of August, up from $250,000 a year ago, according to Hanley Wood, a research firm.

— TJ Sullivan in LA