SOME POSITIVES ABOUT ARIZONA'S REAL ESTATE MARKET

Property taxes fall for 81% in Valley, from the Arizona Republic, reports that according to the county Treasurer, 756,341 property owners will see lower property taxes this coming year, in spite of the big run up in property values we saw in 2006. 182,373 will see increases in their property taxes. One reason is that the tax bills come 18 months after property tax assessments-- which means the assessments were before the big run up. Second, in fast-growing communities, the cost of city school and special assessment districts is spread out among more taxpayers, which happened here locally. Fountain Hills saw one of the biggest property tax drops at 10 percent. On the other end, Buckeye saw property taxes increase 9 percent and Queen Creek up 8 percent. Don't count on the good news to last as the next assessments will reflect the rise in property values.

Commercial market's success offsetting housing decline, from the Arizona Republic, reports that as home building and sales continue to decline, demand for industrial and commercial office space is climbing and vacancy and rental rates are falling. Metro Phoenix's industrial vacancy rate is near a record low of 6 percent, and the Valley is responding by currently having 8.4 million square feet of industrial space under construction, making it the fourth busiest area in the country for warehouse development. The office vacancy rate is expected to dip to 11.5 percent this year, its lowest level since 2000. About 3 million square feet of office space should go up Valley-wide in 2006. Pete Bolton, managing director of CB Richard Ellis, isn't concerned about the industrial and office markets becoming overbuilt like they were in the late 1980's or like the housing market is now. Read Housing headlines from Abnormal Returns for more insight on commercial real estate and REITs.

ACCORDING TO MAYFLOWER TRANSIT JANUARY - SEPTEMBER 15 2006 (BASED ON 6,776 SHIPMENTS) ARIZONA SAW 52.1 % INBOUND SHIPMENTS & 47.9% OUTBOUND.

1. Arizona held the #2 spot for job growth in the U.S.
2. Jobs increased to 2.58 million from 2.47 million in July '05
3. That is a 4.75% increase which is significantly higher that the national rise of 1.3%, led by: Retail, Healthcare, Construction, Hotel/Leisure, Education