Ouch – New Home Starts Decreasing?

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.

St. Louis FED chart showing reduced privately owned housing starts

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  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.

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About Mike Garland

In this age of software, data bases and cloud technology, residential real estate provides an anchor to physical reality. At least for now, there is no virtual reality where people can share a meal, a swim in the pool or laugh in the living room with a view of Camelback Mountain the way they can in a luxury home. I enjoy helping people find and sell homes in the Phoenix Valley. With my team we specialize in residential real estate in the Biltmore area, Paradise Valley and the West Valley. I also head up the Toma Partners relocation group.
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