The longtime demographics of Phoenix have reflected both the fundamental newness and oldness about the place. The Valley of the Sun wasn’t even a significant metro area until the 1950s, when an inward flood of American transplants seeking warmer climates made it a giant overnight sprawl suburb. Its ingrained aspects, on the other hand, lie in a Native indigenous culture that was there long before any talk about nations or borders.
But there is a wrinkle to this mix. From the beginning of its urbanization process about a half century ago, Phoenix became a hub for Canadians, specifically the Canadian business elite, who view the metro area as a warm second home. Over the period, Canadians have become a massive subset within the local culture and economy, and having this critical mass travel back and forth has nurtured an active trade route, and a unique niche within America’s complex economy.
The Phoenix-Canada relationship began in the 1960s and 1970s, right as Phoenix was beginning to grow, says Glenn Williamson, head of the Canada-Arizona Business Council, a network of CEOs from the two areas. Several developers, believing that Canadians would prefer warmer winters, decided to build some master-planned communities, and the customers followed. In the 1980s, Williamson continued, the relationship evolved to include aerospace manufacturing, specifically with Toronto and Montreal. From there the migration snowballed, creating the complex arrangement of today. According to the council website, there is now $4.4 billion in bilateral trade and services annually between Arizona and Canada. There are 350 Canadian companies in the state, spread over 1,100 locations. And while some of this activity exists in Tucson and other parts of Arizona, it is mainly in the suburbs around Phoenix, such as Scottsdale.
The complexity of the relationship has caused some idiosyncrasies. For example, Phoenix has long had fast housing growth, but not much native tree growth in the region to provide lumber. So they import much of it from central Canada, which isn't much further away than the timber-heavy Pacific Northwest. Different comparative advantages--caused by wildly different climates--have also surfaced in agriculture. But most notable is housing sales. As readers may recall, the Phoenix metro housing market was one of the hardest hit during the recession, creating practical ghost subdivisions in the suburbs.
Around then, Canada’s currency was stronger than in the U.S., and Canadians, seeing Phoenix's bargain-basement prices, swooped into the market. In 2012, Canadians accounted for 5% of regional home sales, and they now account for 93% of Maricopa County's internationally-owned residential properties. A lot of these buyers are Canadians who, per the terms of their visa, have single visits of up to 6 months annually in the U.S.
Warm weather dictates which months they stay--obviously--but that just begs a question: given the mild climates throughout much of the U.S., why have Canadians zeroed in on Phoenix? Williamson says that some of it is historical, but that regulatory climates also have a lot to do with why Canadians choose Phoenix over, say, California.
“The cost of operations in Arizona are substantially less than in California,” he says, claiming that this matters to Canadians looking to buy homes or start businesses.
There are, however, issues from outside the state that could affect this special Phoenix-Canada partnership. Take, for example, President Trump's meddling in NAFTA; already the president stuck a tariff on Canadian lumber. But Williamson is unconcerned.
“I don’t think [NAFTA changes are] going to be as Draconian as people believe," he said, at least not enough "to create massive changes in the trading block of North America."
In other words, a strong bilateral relationship that began organically in Phoenix will stay that way, regardless of outside interference.
[This article was originally published by Forbes.]