Phoenix new home building is still a long way off from what it was in 2005, but that is probably a good thing! In 2005, there were around 50,000 housing permits issued and during the past couple of years there have been 11,000 permits annually issued in the Phoenix metro area for single family homes. This looks to continue and even go up as high as 16,000 in the near term. As Larry Kush, a life director with the Home Builders Association of Central Arizona, explained to AZ Central, “Phoenix housing permits should register somewhere in the low 20,000’s every year.” So these numbers do show Phoenix is starting to get back to normal.
The unfortunate side of things comes for MILLENNIALS and HOME BUILDERS.
Let’s start with Millennials.
Millennials tend to want to find their home in an urban setting close to work and entertainment. It’s about convenience and time. The challenge comes from trying to find an affordable single-family home in this setting. Home builders are trying to find ways to accommodate this situation, but with the price of land it is becoming very difficult. For example, lots in Chandler and Gilbert are running as high as $90,000, which based on a lot at that price makes the home price as much as $360,000 (four times the price of the lot). Not necessarily an affordable “starter” home for everyone. The only other option for Millennials is to consider buying further out where prices are lower.
Now for the Home Builders: Shortage of Skilled Labor
Home builders may have the permits, but they don’t have enough skilled workers to complete the homes on schedule. They are having a tough time finding those who can take care of the more “skilled” tasks, such as electrical work, plumbing, ect. This is putting a huge burden on the smaller builders and can put them behind 2 months or more. Much of the labor force left during the down turn and they’re not coming back, so this could continue to be a problem for the home builders unless local people are trained for these skilled positions. This has created a demand for construction workers.
For those of you in the market for a new home or thinking of jumping in, we can help you through the process. Don’t hesitate because of the current land price, we will work with you to find the new home in your price range. You also can’t afford to think “prices might come back down” due to the shortage of skilled workers or other factors because chances are they won’t.