Jul. 1, 2007 12:00 AM
The housing market continues to slow in metropolitan Phoenix, but the area still ranks third in the nation for home building.
According to the National Association of Home Builders, Phoenix ranks behind only Atlanta and Houston for the number of single-family home permits issued this year.
The Valley’s high spot in the home-building ranks comes even as housing permits fell 22 percent this year from 2006’s pace, according to RL Brown’s most recent issue of the Phoenix Housing Market Letter.
All of the big markets are feeling the downturn, some more than others. Single-family home construction has fallen 10 percent in Houston, 20 percent in Atlanta and 35 percent in Dallas, according to the association’s report.
Last year, Phoenix ranked No. 4 for home building after Atlanta, Houston and Dallas, according to the National Association of Home Builders.
Metro Phoenix beat out Atlanta to be the top home-building market in 2004 and ’05, but, in retrospect, that wasn’t necessarily a good thing. At least 30 percent of the homes built during the market’s high point a couple of years ago were bought by investors who either didn’t move into them or found renters.
Those empty homes are now hurting some neighborhoods and their home values as investors can’t sell and their houses fall into foreclosure.
As the housing boom faded in metro Phoenix, building slowed, and the area slipped in the national rankings. Here again, the slowdown could be seen as a good thing since there are plenty of already built new homes sitting unsold.
Housing analysts estimate anywhere from 10,000 to 20,000 speculatively built houses are sitting empty in the Valley.
Some investors signed deals putting very little down, and when the market slowed, they walked away from that earnest money, leaving builders with the house.
Other new homes haven’t sold because buyers can’t sell their existing homes and close on the new ones.
Brown is currently revising his forecast for home building in metro Phoenix downward.
In January, he had estimated 41,000 single-family permits would be issued in metro Phoenix this year. In 2006, there were 42,460 new home permits issued. In 2005, there were 63,570 – but how many of those went to investors who artificially inflated demand?
“Even with 35,000 or 36,000 single-family permits in a year, Phoenix still has a heckuva housing market,” Brown said. Tighter lending standards Home buyers, mortgage lenders and real estate agents across the Valley have been seeing it firsthand. Now, a recent survey of senior loan officers confirms it.
The Federal Reserve‘s most recent survey shows 16 percent of loan officers say they tightened credit during the first quarter of this year.
National housing analyst John Burns said credit standards haven’t been this tough for home loan borrowers since the early 1990s. www.theholmgroupaz.com