At the end of 2012 we started to experience the much awaited resurgence of the new home market in the Phoenix Valley. Investors had bumped up the prices of single family homes to a level to where builders could once again produce the Valley’s most famous commodity – new homes. New communities in either corner of the Valley are beginning to once again develop.
Yet recent data as reported by the National Association of Home Builders and the Fed of St. Louis (FRED) show a clear decrease in new home starts and permits. Indeed, this recent Phoenix Business Journal article by Kristena Hansen reports both a decrease in home starts and some of the reasons why.
The engine of new home construction that was redlining in 2006-2007 has lost power in several of its cylinders. Skilled labor shortages, limited availability of ready to build lots and much tighter lender practices have created a new, much more constrained ‘normal’. Hopefully, if the economy can continue to plug ahead, builders will be able to adapt and fill the need for new housing. Stay tuned.