August 11th, 2016 by Michael Oliver
As projected earlier this year the homebuilders in Tucson are starting to fall behind on build times across the Tucson metro region. Homes that were being built from start to finish in January 2016 in 4-5 months are now taking 7 or more months to complete.
The main reason this is happening is due to more demand for homes then workers to build them. Homebuilding in Tucson had been in a severe slump for many years until about 2015. Between last year this time and today the demand for a brand new home has almost never been higher.
In some areas homebuilders are selling 60-70 homes in a neighborhood in just a couple of months! That type of demand is just not able to be met by the industry until more workers are hired and trained.
What will be the outcome of the building boom?
The short answer is much higher new home prices across the board. Homebuilders LOVE to raise the prices on their homes. Raising prices establishes several things for them:
1) Higher profits to the builder.
2) More buyer urgency is created. Once a buyer on the fence has seen prices go up a time or two they are much more willing to buy today vs wait any longer. This drives additional demand forward and the cycle feeds on itself.
3) Raising prices allow builders to start a neighborhood at slightly below market prices so buyers will actually want to buy in a neighborhood with no homes yet built. Then once they move in the buyers will need to put up with the construction mess and noise. (few buyers will do this unless the pricing is low.) As the neighborhood starts to take shape and buyers can see what things look like (buying a new home is not an impulse buy most homebuyers look and think about the home they want for months and in some cases years.) then they are usually willing to pay more for the certainty . Builders are ready to sell but almost always have raised prices by this point. This continues in lockstep as more certainty and knowledge about the project/ neighborhood emerges.
In summary if you are at all considering a brand new home buying sooner rather than later should yield a lower price then waiting. Be prepared for a longer duration for the home to built however. If you have questions about the new homes for sale or the builders building in Tucson feel free to contact us!
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