VALLEY’S NEW HOUSING STARTS HOTTER THAN THE SUN

May 16, 2013 at 12:30 pm Leave a comment

by: Maria Hass –
The Phoenix Metro Area’s new home market had 6,630 new housing starts in 2011, which increased to 11,102 starts in 2012. The Southeast Valley accounts for 37 percent of these homes, with Gilbert in the lead.

New home construction has doubled since 2011. This is mostly due to the lack of inventory of resale homes and huge demand for homes in our area. Many more builders are expected to get permits for new homes. The new housing space is a great place to be in the real estate business.

New homes are selling like hotcakes. Even those developments that have lots with virtually no backyard space are selling out. Builders are rationing their lots each month. They figured out that by limiting the number of lots they sell per month, they will earn more money by creating demand and also selling later when prices are expected to be even higher.

Builders are also increasing their new home prices by as much as $5,000-$10,000 per month. Prices will continue to increase as long as people are willing to buy. By the way, appraisals for new home construction are no determination of an accurate value. Unlike resale homes, preferred lenders of new construction homes preselect the appraisers. Any appraiser who breaks the deal due to low appraisal will not see further business from that builder.

If a buyer decides to go with a builder’s preferred lender to take advantage of any incentives, the buyer will also get that builder’s hand-picked lender’s preferred appraiser. None of these parties has their best interests on the buyer as their priority.

Demand for homes will continue as long as interest rates remain low. Prices will continue to rise at a steady pace because of low supply and high demand. Once the prices of homes reach a comfortable level for investors to sell, the market will eventually turn into a buyer’s market. This will not happen right away.

However, I generally would advise a homeowner who is in a position to sell a home now to sell it now, rather than waiting for prices to continue to climb. There is extremely little competition in the current market for resale homes. The way to make money in real estate is to “BUY when NOBODY is BUYING” and “SELL when NOBODY is SELLING.”

Entry filed under: Arizona Real Estate, Chandler Real Estate, Foreclosures & Short Sales, Phoenix Real Estate, Real Estate Deals. Tags: , , , .

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