When considering the state of Phoenix, AZ real estate and Scottsdale real estate, it’s impossible not to take into account the recent Arizona immigration controversy. The boycotting of Arizona is big news right now and one can’t help but wonder how this is affecting the state and major cities.

Arizona’s new law states that local and state authorities have the right to determine the status of suspects they believe to be in the country illegally. The passing of this law has caused various businesses to boycott the state. Several inns and hotels have reported a drop in prospective tenants and many stores on Nogales now close early. Some other U.S. cities (not to mention Mexico) have even banned travel to Arizona.

Is there any good news on the horizon? Financial experts predict that the effect on real estate and business will be largely short-term. Elliott Pollack, president of Elliott D. Pollack & Co. says that boycotts “essentially blow over, either because the issue was settled or people just forget about it.”

In fact most of the cancellations, suggests Arizona Hotel and Lodging Association spokeswoman Kristen Jarnagin, are due to people wanting to “stay out of the controversy” rather than make a statement. Although the Phoenix Arizona homes industry expects to lose $90 million during the next five years, many officials are starting to make amends with tourists.

Recently, the local Chamber of Commerce launched a campaign to promote its businesses in Mexico. Realistically speaking, the losses of Arizona’s real estate companies are good news for travelers who are still willing to travel to the Copper State for their vacation or business meeting. Many hotels, which now are aching to fill their schedules, are offering lower rates and discounted stays.

While the boycotts will affect the real estate industry in the short-term, Arizona’s outlook remains stable. Remember that Arizona, as its own entity, has the 61st most lucrative economy in the world according to the CIA World Fact Book. Arizonians remain confident that the Copper State can recover from this setback.

It depends who you ask. Some experts are saying that house prices are dropping and are the worst in the United States, while others are suggesting that the results show signs of stabilizing. For example, many point to the state’s early 2010 sales success, though this rush was obviously brought on by the federal tax credit program. When that credit plan expired in late April, obviously, a significant decline was coming. It went from 8,900 to 9,300 and dropped to 6,400 in May.

Some experts also look past the temporary increase thanks to federal aid, and instead point out that the increase for the month of April was actually a pattern of quarterly success that has happened for three straight years. One point that is undeniable about Phoenix, AZ real estate and Scottsdale real estate is that low-end and foreclosure houses are flooding the market.

There were 14,000 listings for Arizona homes and they flooded the market in the months of March and April. However, 26% of these homes were foreclosed homes and 27% were short sales. This is another peak for the state. Many financial and real estate experts put stock in the “Pending Sales Index” which promises a 96% accurate projection of home sales. The average price of square footage is about $90 and this is also a steady increase in the overall market.

In the end, Phoenix, Arizona homes and other Arizona homes are on an upswing, and then on a downswing, and back again. What is evident is that there hasn’t been a major and consistent upswing as of May 2010. When the bubble burst in 2008 there was a major recession recorded. We’re still waiting for that major upswing. The tax credit program did make some waves and helped to strengthen the real estate industry. However, the state could certainly benefit from a few more helpful programs. In the meantime, real estate companies are stepping up to the plate and offering their own incentive programs for new buyers. Phoenix and Scottsdale homes for sale are still selling, though the industry is still waiting for that one resounding spike.