Why do home builders in Phoenix continue to build houses? Who is in charge of building more homes here in the valley? And why do they allow their builders to create more homes in a market full of new and resale homes?
I can understand building more homes if the demand for the homes is high. However, right now people who are buying do not need an abundance of homes. I have seen too many buyers forget which house they liked and which ones they hated because they saw too many homes.
In fact, most buyers are having trouble understanding the basic concept of a buyers market and the benefits of buying a home today. I have explained to countless clients the benefits of today's market only to have them discount each one of them.
More over, lender owned properties/foreclosures are also adding to the inventory as a whole. And since Phoenix ranks high in foreclosures it makes for difficult market where any home has trouble selling. Home values decline with each foreclosure to hit their neighborhood. And new home communities are not immune to this epidemic.
Additionally, misconceptions like "foreclosures are the best values and/or have the best prices" are hurting home sales in the valley. Also, foreclosures hold lower days on market and they sell much faster than other homes. I am sure this is true anywhere right now.
The good news is that investors are coming out once again snatching up the best foreclosures. Making for a competitive market on lender owned homes. In fact, getting a contract accepted on a foreclosed property is very tricky. These properties are receiving multiple offers where the banks are asking for highest and best offers. So this is actually leading to foreclosed properties selling above list price.
So things in the valley are not as bad most people expect it to be. In fact the biggest problem facing our market right now is INVENTORY. Sadly I do not see a quick drop in our inventory as long as banks foreclose on properties and builders keep building new homes that will sit vacant on the market. One silver lining in this gray cloud is the fact that congress passed, and President Bush signed a new law helping distressed home buyers. With any luck our market will rebound sooner than later.