I have seen pockets of new construction taking place around parts of the Valley. However, seeing active construction going on in Maricopa is very interesting. DR Horton has been working on its Homestead community in Maricopa or some time but definitely there is more activity going on.
There is a sense that the market is stabilizing finally and so this is part of the reasoning for new build construction. If the sense is that the market is stabilizing and will eventually move upward, then construction can make sense. However, whether the market is really stabilizing due to unfettered market forces or artificial management is a question I will talk to in a later post.
Manage New Build Inventory or Create Another Problem
With regard to any new construction, my belief is that the various town and city councils across the Valley need to monitor this more closely than what was done during the market high and earlier parts of the market downturn.
Why? Because the builders were slow to reduce their level of construction even in the clear downturn which ended up adding to the inventory on the market. This was deliberate on their part and the builders pushed sales by undercutting resale homes, to the point of undercutting their existing customers with even lower prices for new homes than what they paid.
This was an awful time in the market. There were many residents who could have sold their homes if the builders had slowed down production earlier and not undercut their existing customer base.
So, the builders, in my opinion, had a big role in creating the market problems we have today. That’s not to say they are the only parties at fault but it is to say that they definitely played a hand in it.
So, coming back to today…let’s hope that city councils and planners realize that unabashed new construction in this difficult market period could actually make conditions worse – new construction may fuel jobs but if not checked could result in greater losses down the road.
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We have seen new construction homes on the rise here, and in the national news it’s the same thing. There are more building permits being bought every month then the previous one, which is a good sign that we are stabilizing. Great post!