New Home Sales
April 20, 2015
By Dennis Webb
The first quarter of 2015 has seen a resurgence of new home sales throughout the Valley. Reviewing the first two months in 2015, there were 1841 permits compared to 1490 permits in 2014 – a 24% increase*. New home permits last year totaled 10,840 which was less than the previous two years. When everyone thought the rebuilding of new home sales was underway in 2012, activity in 2014 fell 15%. So why the uptick in new homes in 2015? General interest to own a new home is coming back among many people.
The new home market is seeing the long awaited arrivals of the millennial generation starting to explore the idea of home ownership after seeing rents rise much faster than home prices. The millennials see the value of new home ownership, not in just the competitive house payments, but tax reductions as well. Additionally, they see advantages in energy efficiency and seek the latest trends, such as painted cabinets, quartz counter tops and a more modern approach to design and construction
There is also the boomerang buyer, or one of the 250,000 plus people in Phoenix who had a short sales or foreclosure. This group is literally counting the days until they can own a home again. They work with lenders who figure out exactly when their anniversary date is to be able to close on a new home. Some are eligible to buy this year – we’ve already seen activity from this group.
The baby boomers are a huge part of the new home market and their tremendous buying power of wealth cannot be underestimated. They are both downsizing and upsizing. One thing that is consistent regarding floorplan is a single level or at least a master bedroom downstairs – it’s of utmost importance.
Generation X, sandwiched between the boomers and the millennials, are another group that have been waiting on the sidelines and not having the confidence to pull the trigger on a new home investment. They were affected by the foreclosure and short sale either directly and indirectly and now have renewed interest.
The multi-generational buyer is also a force that has entered the new home market. Flexibility in design is the key as they figure out how to transform living spaces that fit their needs. Whether it’s an aging parent or a returning college student, builders now can offer many choices of different plans to choose from.
One thing that all of these groups are looking for in a new home is technology both in the buying experience as well as the home itself. Items that builders need to offer for today’s buyers are interactive floor plans, interactive lot maps, kitchen and bathroom visualization and online option selection tools to promote the buying process. When it comes to the home itself, energy efficient, healthy and smart homes is the trend. Whereas these features were nice to have a few years ago, they are becoming necessary in today’s new home market.
*Source: RL Brown
Dennis Webb has been with Fulton Homes for 19 years. He brings 25 years of experience to the Arizona industry. Dennis recently appeared in the Wall Street Journal highlighting Arizona from a national perspective on the increase of new home sales growth. Dennis can be reached at firstname.lastname@example.org.