Recognized by Forbes & Phoenix Business Journal as Arizona's #1 Producing Real Estate Team

Jason Mitchell Real Estate Group

Phoenix AZ New Home Builder Nightmare

Phoenix AZ new home builders are the largest holders of real estate in Scottsdale, Fountain Hills, Peoria, Mesa, Tempe, Glendale and Peoria.

Phoenix AZ new home builders are also one of the largest employers of real estate agents and facilitate a large amount of money to outside real estate agents, mortgage brokers, appraisers, contractors, suppliers and blue collar labor force.

The success of new home builders is critical to the recovery of the Phoenix AZ real estate market and the economy.

The NAHB (National Association of Home Builders) which is a great organization for the Phoenix AZ real estate market and the national economy as a whole has been a big supporter of legislation to assist a real estate market recovery.

Builders are selling homes However, builders are starting to feel more pressure as a result of the credit crisis.

I want to share a story with you of a builder that is going through a nightmare.

A well established Phoenix AZ new home builder is in the middle to later stages of completion of a very expensive custom home. The buyer has been in contract for the home for about a year. The buyer has put down 10% deposit and additional monies for upgrades for a total non-refundable deposit of $150K. In the recent week, the bank that was originating the loan for the buyers was closed and now out of business. The buyer needs to find another lender. However, due to the size of the ‘jumbo’ loan, down payment requirements, credit score minimums, underwriting guidelines make it impossible for the buyer to get a loan. The outcome is a buyer who loses $150K. A builder who has likely put $500K minimum into a home that they cannot sell. A real estate market with one less transaction. Agents, mortgage lenders, etc… with less income for the economy. And worse, there is little the buyer or anyone can do.

Although, not perfect, I am pleased to see the Housing Rescue bill (FED Bailout) passed. It is not a silver bullet, nor will it work fast enough.

However, it will ease credit to help businesses keep jobs and deliver products to a starving economy and it will better consumers borrow money to get through a rough patch. If you are a buyer, there are many builders, who as a result of similar experiences, have inventory of completed homes, called ’specs’, that are finished and vacant.

As a result, builders want to sell these ‘specs‘ to reduce overhead. Builders are also making available for sale ‘model homes‘, often called ‘field models‘ at deeply discounted bargain basement prices.

If you have the ability to get a loan, I strongly recommend you visit a sales office or model home in the many wonderful new home communities throughout Phoenix.

There are homes for sale that are less than builder cost. This may never happen again in our lifetime.

Call me for a private tour of new homes in Phoenix, Scottsdale and Peoria and to learn more about life in Scottsdale and living in luxury communities in Phoenix.