Phoenix-area declines in foreclosures, home supply bode well for 2012

In many ways, 2011 has been the most difficult year Phoenix-area homebuilders ever have endured, but local builders and analysts said there are several reasons to anticipate a more robust new-home market in 2012. Nothing has come easy lately for an industry that just five years ago was building and selling about 60,000 homes a year in the Greater Phoenix market. This year, homebuilders are on pace to sell about 7,200 homes, a decline of about 500 sales from 2010, said Jim Belfiore, a home-building analyst based in Phoenix. Since late 2006, the number of speculative homes -- those built in anticipation of future demand -- has dropped to about 1,950 homes from roughly 12,500 homes, said Belfiore, president of Belfiore Real Estate Consulting. Today's homebuilders are dealing with a hyper-competitive market in which too many subdivisions are vying for too few buyers, and shareholders are keeping a close eye on every dollar they spend. "Their investors are scrutinizing every move they make, because they're not really profitable at this point," Belfiore said. Still, local homebuilder executives and analysts said there are reasons to expect a better year in 2012 beyond the simple belief that the new-home market can't get any worse. They said there already have been improvements in some key market fundamentals during the past few months that have given homebuilders a reason to hope.

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