Analysis of the Tucson, Arizona Housing Market

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Analysis of the Tucson, Arizona Housing Market 1xt,t I ',308 FAl- T"r4/*r. , A' t t' i'lLb W"lfi"e ? I a TUCSON, ARIZONA HOUSING MARKET as of August 1, 1966 ry,r,N' o...3l,llli ANg'or ^..- i uir,.,r1V^u'w ,,,nro-' WASHINOTON' Jl.ri" i I 1967 a A Rcport by thc d DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FED ERAt HOUSING ADMINISTRATION WASHINGTON, D. C .20111 June 1967 a ANALYSIS OF THE TUCSON ARIZONA HOUSING MARKET AS OF AUGUST 1 t966 -,- "r "oll:'ilh ,''' i. II , .,iti"'''r"-ro ,,^:i:,:. ;; iru, Field Market Analysis Service a Federal Housing Administrat.ion Department of Housing and Urban Development Foreword a As a publlc aervlce to a66ist local houelng activities clearer Ehrough understandlng of locar housing .ark"t conditions, EH; lnlElated publlcatlon of its comprehenslve housing market analyses early ln 1965. t{hile each reporr ls deslgned specificarly FllA for use ln adminleterlng ite mortgage lnsurance operaElons, 1t ls expected that the factuar informatlon and the irndings conclusions and of Eheee reports wlIl be generally useful .l"o to bulldersr Dortgagees, and othere concerned wlth local housing problema and to others havlng an interest ln local economic con- dltlonc snd trends. slnce aarket analyels is not an eract sclence, the judgmental factor ls rmportant, ln the development of ftnirngs and conclusions. There wlll be differencea of oprnton, of course, in the lnter- pratatlon of avallable factual informatlon in determining absorptlve the capaclty of the market and the requirements for main- tenance of a reaeonabre barance 1n demand-suppry relatlonships. The factuel'framework for each analysis is developed as thoroughly as poeslble on the basls of lnformaElon avallable from both lofal and natlonal lources. unleas epeclflcally icentifled by source reference, alI egtlmatee and Judgments ln the analysls are those of the authorlng analyst and ihe-IttA Market Analysls and Research Sec tlon . a Table of Contents Page Summary and Conclusions i Housing Market Area 1 Map of Area 2 I Economy of the Area Character and History 3 Emp loymenE 3 Principal Employment Sources 5 Unemp loyment 7 Future Employment Prospects 7 Income 8 Demographic FacEors PopulaEion 9 Househo ld s t2 Housing Market Factors Housing Supp[y 15 ResidenEial Bullding AcEivity t7 Tenure of Occupancy 18 Vacancy L9 Sales Market 2t Rental Market 24 Urban Renewal 25 Military Housing 25 Map of Urban Renewal Area 26 Public Housing 27 Demand for Housing Quantitative Demand 29 Qualitative Demand 30 a ANALYSIS OF THE TUCSON ARIZONA HOUSING MARKET AS OF AUGUST 1 L966 Summary and Conclusions I Nonagricultural wage and salary employment in the Tucson Housing a Market Area (HMA) increased from 54,600 in 1956 Eo 79,4oo in 1962. Annual increases ranged from a low of 1,600 between 1957 and l95g to a high of 6,6o0 between 1961 and 1962. Employment declined by a about 3,70o between L962 and 1964, however, mostly in manufacturing and construction. The average number of wage and salary workers in the first seven months of this year is 4,ooo above the same period in 1965, an indication that employment again is beginning Eo ex- pand at a rnoderate rate. During 1965, unemployment in the HMA averaged 6.2 percent of the work force, s slight improvement over the 1964 ratio of 6.5 percent. rf the 4.6 percent rate experienced so far this year is maintained, it will be the lowest reported since L957, when 4.1 percent $/ere unemployed. Ncnagricultural employment in the HI,,IA is expectecl to increase by 5,ooo in the next two years. Most of the increase is expected to take place in the nonmanufacturing sector of the economy. Government employment will account for the largest numerical increase in employ- ment, although there is a possibility of slower growth after mid-1967 because of a Levelling off of military strength and civilian employ- ment at Davis-Monthan Air Force Base. -2 The current median income of all families in the Tucson HMA is $7,ooo, after deCuction of federal income tax; the median for renter households of two or more persons is $5,7o0. currently, an estimated 21 percent 'two of all families and 3O percent of the renter households of or more persons have after-t.ax incomes of less than $4,ooo a year, while seven percent of all families and four percent of all renter households of two or more persons receive annual after-tax incomes of $l5,ooo or more. 3 The Tucson HMA has a population of 336,400 at present., an increase of 7o,75o (27 percent) since April 1960. An est,imated 246,5oo persons, over 73 percent of the HMA total, reside in the city of Tucson. Most of the growth in the population of I the area occurred between 1960 and 1962 because of gains in military and milit.ary-re- lat,ed act.ivit,ies. The population of the HIr{A is expected to dncrease by 17,6oo in Ehe next two years to a level of 354,ooo by August 196g. Most of the projected increase in population is expeited to occur in the next twelve months because of the possibility that recent increases in government employment. and in the number of military personnel will slow somewhat after mid-1967, 'l 't 4 Currently, t.here are 98,2O0 households (occupied housing units) in the Tucson HMA, an increase of 2O,'75O since April 1960. Based on the anticipated increase in population, there will be 1O3,7OO households in the HMA by August t968, an increase of 5,5OO above the current estimate. 5 There are 111,7OO housing units in the HMA at the present time, the result of the consEruction of 24,450 new uniEs and the addition of a 3,2OO mobile homes since April 1, 1960, less 1,15O units removed from t.he invent.ory because of demolitions and other inventory changes. Over two-fifths of all units authorized in the HI{A between January 196O and August 1966 were in multifamily structures. 6 There are 10,2OO nonseasonal, nondilapidated vacant, housing units in the Tucson HMA now available for sale or rent, an over-all vacancy ratio of 9.4 percenE. An estimated 2,30O of the units are available for sale, a homeowner vacancy rate of 3.3 percent.; the remaining 7,9OO units are available for rent, a rental vacancy ratio of 2O.O percent. The currenE homeowner vacancy rate has increased slightly since 196O, buE the current rental vacancy ratio is nearly double the 11.1 percent ratio reported in April 1960. 7 The volume of privately-owned net additions to the sales housing in- ventory that will meet the needs of new household growth and result in a more accepLable demand-supply balance is approximately 1,25O units annually during the next two years. In addition, mobile homes are expected to provide housing for about 1.5 percent of the household growth. The demand for new sales houses is distributed by price range on page lO. i,lost new construction should continue to be presold, p3r- ticularly in the price ranges in which the overhang of acquired pro- perties is concentrated. 8 The current excess of standard vacant rental units is sufficient to satisfy all of the quantitative demand and almost all of the quali- taEive demand for new rental housing during Ehe next t\,ro years. The producEion of ne!', rental housing in large numbers in the next two years will prevent a reduction of the current sizable surplus of rental housing in almost all locat.ions, rent ranges, and unit sizes. Under these circumstances, only rental projects designed to satisfy a specific demand not nor^r being met should be considered for consEruc- tion. The amount of such demand likely will be minimall in any case, demand the should be clearly evident before construction is started. a This conclusion does not relate to demand for public low-rent housing or rent-supplement accommodations. ANALYSIS OF THE TUCSON ARIZONA HOUSING MAR"KET AS OF AUGUST 1 L966 Housi Market. Area The Tucson Housing Market. Area (HMA) is defined as Pima County, Arizona, and is coextensive with the Tucson Standard Metropolltan Statistical Area (SMSA) as defined by the Bureau of the Budget and the Tucson Labor Market Area as defined pima a by the Bureau of Employment securiEy. county is located in southern Arizona, wit.h part of the southern boundary on the inEernational border between the United StaEes and the Republic of Mexico (see map on page 2). The April 1960 census reported that nearly g6 per- cent of the population in the HMA resided in the city of Tucson and near- by suburban areas. Indian reservations, nat.ional forests, and national monuments comprise about Ewo-thirds of the 9,25o square miles in the county. The Southern Paeific Railroad, several bus lines, including Continental Trailways and Greyhound, and over a dozen interstaEe trucking firms provide transportation facilities for the area. Transcontinental, regional, and local air service is provided by American, Trans 1^lorld, Continental, Apache, Frontier and Aeronaves de Mexico AirIines. Main highways serving the area include U.S. Highways 80 and 89 and State Highways 84 and 86. Commutation between the HMA and nearby counties is not significant. At the time of the 1960 Census onty 680 workers were commuting into the HMA from nearby areas. Nearly 60 percent of the in-commuters came from Maricopa County. About one-half of the 1r600 out-commuters traveled to Pinal County, the southern portion of which is near the city of Tucson.
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