August 27th, 2007 by Michael Oliver

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As earlier reported in the Daily Star, the number of new home permits in Tucson for July was down more than 40% year over year. It also stated that new home prices are down 5.9% from July of 06. As I have been saying for a while, the new home industry is in trouble in Tucson. Currently, many homebuilders are losing a tremendous amount of money and are now severely limiting the homes they are building. In most cases, they are only building homes for very well-qualified buyers with a full earnest money deposit before building will start. Spec homes (especially finished) are where some of the best deals are to be had right now. Homes that in 05 or early 06 where selling for 400k are currently sitting on the market with builder incentives of 50-75k or more!

     The current numbers of new permits down 40% year over year should point to the fact that builders are starting to severely restrict building until they can do so profitably. By doing this, the market will be able to correct sooner vs. later. Being able to step up and buy a builder’s home — or even better a finished spec home (sometimes called inventory home) — should allow you to buy with a comfortable amount of built-in equity. This option should be seriously considered if you are looking to buy soon in Tucson or the surrounding areas of Oro Valley, Marana, Catalina, or one of the hardest hit areas of Sahuarita.