Gilbert New Homes Real Estate Market: Beginning to Recover?

One does not have to drive far in Gilbert (or anywhere in the Phoenix metro area) to see this:

This would be an abandoned subdivision. The streets and sidewalks are in, utilities are run to individual lots, there may even be some common area landscaping done.

But there aren’t any homes.

The builder’s bailed at some point for a variety of reasons low/no sales, financial difficulties (including bankruptcy), you name it.

Sometimes you’ll even find them with half-built homes you can buy very cheap and then remodel with the help from Boom and Bucket machinery.

It’s a sign of the cratered new home construction market.

However”¦ there are some signs of life, particularly in Gilbert.

Here’s a photo I took yesterday about a half a mile from my house:

That would be active new home construction, and every one of the homes in this photo are already sold.

The Arizona Republic reported yesterday that three builders ”“ Toll Brothers, Pulte and Meritage homes ”“ have purchased about 230 ready-to-build lots in Stratland Estates (near Higley and Germann roads) and plan to start building early next year.

This subdicvision was left nearly empty after the developer, Stratland Estates LLC, filed for bankruptcy on July 2008, according to the Republic article.

Pulte bought 107 lots and plans to build three models ranging from 1900 to 3000 square feet. Sales should begin in March 2010. Meritage expects to build 65 homes and Toll Brothers about 60.

Additionally, 34 spec homes were sold to an independent investor.

This comes on the heels of news that the Town of Gilbert has issued nearly 1,000 new home construction permits this year ”“ twice the number officials expected. In September, Gilbert issued 116 new home permits, more than any other Valley municipality, including Phoenix proper.

What this may mean for “traditional” sellers

From an overall real estate market perspective, an increase in new home construction is generally considered a good sign.

But if you are a “traditional” seller ”“ meaning you are trying to sell the home you are living in ”“ there may now be even more competition for buyer’s eyes. You are already competing against foreclosures and short sales, along with existing new homes ”“ many of which are offering loads of buyer incentives.

That is a LOT to compete with. Many real estate buyers think they can get a “better deal” with a foreclosure or short sale (this is not always a safe assumption, but it’s something you have to contend with). And it’s hard to look past incentives like $30,000 – $80,000 in free upgrades on a new home. It’s also shocking the amount of defects and errors that are present in new-build properties, so we strongly suggest that you carry out a new build snagging survey before you buy, as that way you can get them all fixed before you buy.

You can’t really directly compete with a new home builder offering crazy incentives. But you CAN make your home clean ”“ immaculate clean ”“ offer a warranty, get it pre-inspected and do repairs, make it easy to show, be willing to negotiate and price it realistically. That will help level the playing field.

A traditional seller in the Phoenix market can get their home sold. It’s not easy, it will probably take time, and in all likelihood you won’t get as much for your home as you’d like. But it can be done.

I know that’s not what anyone wants to hear, but you’ll get no sugar-coating here.