New home builders are showing “signs of life” in Arizona, especially in the East Valley, one economic expert says.
But it still may be a while before the state returns to “normal levels.”
“Home building, similar to job growth, may be up somewhat, but continues to be far below ‘normal,’ and therefore, the best observation we can make is that home construction is showing signs of life,” research professor Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business at Arizona State University, said. “(It) may be up as much as 50 percent this year, but even at that, it will be still one of the weakest years on record for Arizona.”
Gina Canzonetta, marketing manager for Maracay Homes, said Arizona home builders are on track for 14,000 new home permits this year, double the average of the last two years, but still below the “normal” levels of 20,000 to 25,000 a year.
In his latest housing report, Michael J. Orr, director for the Center for Real Estate Theory and Practice at ASU’s W.P. Carey School of Business, said home buyers are seeking out new builds because the inventory is shrinking in the resale market and there’s a lot of competition from investors.
Orr found that from June 2011 to June 2012, new single-family home sales increased by 39 percent in Maricopa County, with Gilbert leading the way.
“As ordinary owner occupiers get increasingly frustrated with the difficulty of competing against investors with cash offers, some have turned to new homes as their source,” he wrote in his report.
Maracay’s Canzonetta said home builders are seeing the change.
“We’re in the middle of recovery. We’re starting to improve,” she said.
Chandler leaders have already indicated the city is close to being out of space for new developments.
So don’t expect to see the large number of new home permits of the boom years, Orr signals in his report.
“We must remember that these permit numbers are still very low compared with what we typically saw for any June prior to 2008. Even with these permit levels, new single family homes will remain a relatively small part of the market compared with 2007 and earlier,” he wrote.
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