January 20th, 2010 by Michael Oliver

Share This Post

New home builder sentiment headed down to a 15 rating in January from a 16 rating in December as home building executives outlook on the future of their business has lowered over the past thirty days.A rating of less then 50 suggests the new home industry is in a contraction or (recession. )Executives blame a couple things on this reduced outlook.

“Home buying conditions have rarely been as good as they are right now, but consumers are still waiting to see significant positive signs of improvement in employment and confidence, and this is slowing buyers’ return to the market,” said NAHB Chief Economist David Crowe in a statement.

“Meanwhile, competition from foreclosed homes is also severely impacting new-home sales. That said, expected improvement in the job market this spring will help propel the housing recovery as we head into the prime home buying season,” Crowe said.

Tucson New Home Builders are facing the same fate as in many other areas of the country. Foreclosure homes (many times in the same neighborhoods and areas the builder is building in.) offer ultra cheap pricing that makes for a formidable competition against new product. High un-employment in Tucson (while not as high as the national average) is keeping many home buyers out of the market especially those in the mid price range ($250k-$500k).

I do think the new home industry in Tucson is in much better shape and the builders are responsibly managing their businesses for this current Tucson housing marketplace. Builders are staying away from allowing too many spec homes to sneak up on them by requiring higher earnest money deposits and doing a better job pre-qualifying buyers before starting home construction.

Another huge factor that is keeping the new home industry alive currently is almost all of the builders made a wise business decision to re-engineer their businesses from top to bottom to cut costs and allow them to make a profit selling homes for much lower prices then in the past 5 years. Every large builder I know of went back and came out with brand new floor plans that were cheaper to build. These cost saving plans allowed their new home product to rival Tucson foreclosures. Richmond American, KB Home, DR Horton, Pulte Home and Meritage have all offered new housing lines to compete in this new marketplace.

This has resulted in new homes in many situations being just raw “better deals” then any other seller can offer. Just a little over a week ago I helped a client negotiate on a brand new home in Rancho Sahuarita here are the quick details;

-Over 2500sf

-4 bed, 2.5 bath, with a gameroom

-2 Car Garage

-Large Backyard

-On a Cul-De-Sac

-High Ceilings, very nice floor plan, quite a few options included standard

What should something like this be priced for as a brand new home in the very popular Rancho Sahuarita. In my professional opinion the builder should have been priced at roughly $225,000 and accepted any offer over $220,000. Many Foreclosure homes are currently starting in the low $200k’s for this size and style home but those need work. A nice foreclosure home would run you about $225k in Rancho Sahuarita for over 2500sf.

What sorta deal did my client get?

Well they paid -$189k and are getting the following:

-Special financing rate on a 30 yr fixed mortgage (I think its a 4.5% 30 year fixed)

- $10,800 in options money to be used at the builder design studio for upgrades

- Roughly $5,250 in closing costs

-And the home will be move in ready within the next 45 days!

So when you net this sale out basically the builder is selling the home for about $170,000 and we are talking a 2500sf+ new home in Rancho Sahuarita. Nothing in the resale, foreclosure, or even new home market competed with that deal. I checked everything available and physically went to every builder in Rancho Sahuarita to price check this home and nothing came close!

The best news?

That builder has other deals like this and they are not advertised on MLS currently. So this shows at what lengths builders are willing to go to move homes today.

new home builder news, New Home Builder Sentiment, New Home Builders Tucson