The temperature isn't the only thing sizzling in Phoenix. The housing market has been red hot for years, and mortgage bankers see no signs of cooling soon.
The weather - low humidity and mild winters - has helped drive the market, luring many, especially East Coast retirees.
As a result, population and employment in Maricopa County, which includes Phoenix as well as Mesa, Tempe, and Scottsdale, have been rising.
Tracy Clark, a senior economist at Seidman Research Institute, said the county's population grew 2.7% last year and is expected to rise 2.6% this year and 2.5% next.
Unemployment was 4% at yearend 1995 and is expected to hit 4.3% by the end of this year. The national rate last month was 5.1%.
In the early 1990s, many of the area's new jobs - such as staff at the numerous retirement resorts and communities - paid relatively little. As a result, mortgages were typically small.
That's changing. In the last few years, high-tech companies including Intel, Motorola, and Honeywell have built plants in the Phoenix area, spurring an influx from California.
"Phoenix has become almost another Silicon Valley," said William R. Norton, area manager for Weyerhauser Mortgage's Arizona branch.
But Rick Rogness, vice president and manager of Inland Mortgage Corp.'s Mesa branch, said high-tech companies employ only a small fraction of workers in the area.
The consistent level of job growth has kept home builders busy. Tom Halley, executive vice president of Countrywide Home Loans' western division, said demand for new housing has exceeded supply, largely because of a labor shortage.
According to R.L. Brown, publisher of the Phoenix Housing Market Letter, single-family housing starts from January through July totaled 18,297, nearly 12% more than a year earlier. At this pace the 1996 total is likely to beat last year's 28,543, which was a record.
Nick Sykes, president of the Sykes Report, a newsletter that tracks lending activity in Maricopa County, said July's volume of new-home loans topped June's by 3%.
The resale market in Phoenix has been torrid as well, despite higher interest rates than earlier in the year.
"If you have a nice home at a price within reason, it doesn't stay on the market very long," Mr. Rogness said.
Most mortgage bankers say only interest rates are holding back growth.
Mr. Brown said he sees signs that the new-housing market will slow this year and in the next few, but he predicts no "drastic slide." He said he expects Phoenix to remain in the top three housing markets in the nation in housing starts. It was No. 2 last year, behind Atlanta.
Stan Morris, president of the Arizona Mortgage Bankers Association, said he expects some softness in construction lending in the next few months.
Higher rates have also slowed refinancing. Mr. Rogness said refi applications at his branch were "almost nonexistent." Mr. Sykes of the Sykes Report said his monthly figures show refinancing slowed in Maricopa County during the spring and early summer.
But the overall outlook is rosy, and mortgage bankers have to fight tooth and nail for market share.
"I don't find the same kind of price competition (elsewhere)," said the trade group's Mr. Morris, who is also senior vice president and national production manager for the builder/agent division of Banc One Mortgage Corp. His operation was No. 2 in the first half, behind Norwest, in Maricopa County purchase loan volume, and No. 5 in refinance loans, according to TRW Redi Property Data.
Weyerhauser's Mr. Norton conceded that profit margins in Phoenix were "pretty thin" because of the intense competition.
