There was a summit held on our State and local economies, where they ares now, where they are going, and what this all means to the consumer and local businesses.  The Arizona Republic reported on the Real Estate specific portion of this summit. The good news out of this is that they do see a turn-around, and that we will not slide into a "depression", however this recession has hit Arizona harder than most states.
     They reported that the residential-housing market probably will recover faster than other real-estate sectors, such as office, industrial and retail, Scottsdale economist Elliott Pollack said. But the housing market is still three to four years away from full recovery, he said.  

The problem is that there was a surplus of single-family homes built in 2005 and 2006 and there aren't enough people moving to the state, enough jobs being created or enough people confident enough to buy new homes.

Pollack estimates metro Phoenix has a housing surplus of 40,000 to 50,000. Tucson and Prescott also are suffering from an oversupply of homes, but the rest of the state is not, he said.

"My guess is that the residential market is not going to reach normal until 2012," he said.

At the same time the Valley is coping with too many houses, Arizona Public Service Co. has reported its lowest number of residential hookups since it began keeping records in the 1950s, an indication that in-migration has slowed dramatically.

Construction of offices, industrial buildings, apartments and retail space also has outpaced the demand, and construction is likely to slow down if not stop in a year or two, he said.