When we look back at the boom Real Estate years in the Phoenix Real estate market (doesn’t that seem like a heck of a long time ago?) we consistently look at the pace of new home sales and what the big builders like Pulte, Del Webb and others were doing.
So far this year, builders have spent 90 million dollars on land purchases for new homes. That’s the most builders have purchased since the peak of 2006. Why is this significant? New land purchases could be a sign that the cycle is stirring to life again.
Back in the day, Builders bought land years ahead of construction and bought them on the outer edges of the Valley. This time they are being more selective and targeting areas closer to central phoenix and along freeway routes. Adapting to market conditions, builder s have reduced almost by half their costs in building homes and even with a smaller profit margin, are poised to do business in the present market.
A recent shift in the habits of Homebuyers has helped builders recently. Most notably sales of “normal” homes which are anything bank or short sales are up. Buyers have been extremely frustrated with long process and bidding wars that have accompanied those sales. As a result a growing number of buyers have opted to buy new homes.
With all that’s going on, the news is a good sign but there is still a cautious outlook to be taken. Keeping it in perspective, 2009 was the worst year since the early 70’s. But with this years’ permits for building new home up 90%, and New Homes being an important component in our market, the news is good and is a step in the right direction..
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