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January 1, 2008 - 7:43PM
Location, price key for home buyers in 08
Misty Williams, Tribune
Valley homebuilders will continue to face major stumbling blocks in 2008 including reluctant buyers, stricter credit standards and an oversupply of homes.
Read Misty Williams' blog, From the Ground Up
A total of 3,025 new homes were sold Valleywide in November, a 27 percent drop from a year ago, according to the latest Phoenix Housing Market Letter from analyst RL Brown.
Builder problems are not going to be solved overnight, Brown said.
The market is going to have to work through the challenges that the excesses of 2004, 2005 and 2006 brought us, he said.
An overabundance of homes for sale will remain a significant problem for builders, though inventories have dwindled and sales have stabilized in recent months.
New home sales have ranged from 2,945 to 3,159 per month for the last eight months, according to the report.
From January through November, 34,850 new homes were sold a 24 percent fall from the same period in 2006.
In 2008, Brown said, location will be more important than it has been in several years with buyers paying more for homes in well-located neighborhoods close to employment centers, good school districts and shopping centers.
The successful builders also will be those who redefine themselves, he said.
Many are already starting to offer less expensive homes that are smaller and more basic.
Also this year, foreclosures will continue to have a tremendous impact on the market with banks dumping properties at distressed prices, Brown said.
And builders will face hesitant buyers, who are waiting to see if prices take another drop.
Theres a confidence factor that is lacking in the market, said Greg Bamford, who builds custom homes in Gilbert.
Bamford said that hes still seeing new applications for homes each month but that the custom home industry has felt the impact of the slowdown.
Some potential buyers have been reluctant to spend money especially those who are involved in the industry, such as contractors, people in banking or those with investment portfolios. Builders will have to be patient and wait out this cycle, Bamford said.
The question is the timing, he said.
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