Agency advertises land once slated for roads

Glen Creno
The Arizona Republic
Mar. 3, 2008 12:00 AM
The state Department of Transportation has plenty to do in planning and taking care of highways across Arizona.

But it also has another job: real-estate sales and management.

ADOT owns several houses and vacant chunks of land it picked up buying corridors for new highways and freeways, and a lot of it is for sale or rent.
A 1,900-square-foot, three-bedroom home near the Santan Freeway in Gilbert is listed with a minimum bid of $245,000. A 3,570-square-foot rental in the Ahwatukee Foothills that sits in a gated community is priced at $1,800 a month.

And nearly 40 commercial and residential parcels, ranging from tiny scraps to a 16-acre piece appraised at $10.51 million, are for sale mainly in and around Phoenix.

ADOT sells the property as soon as it can and turns the money into state highway funds.

“We’re not in the business of hoarding property for our own use,” said Raul Torres, manager of ADOT’s property-management section.

But selling properties these days isn’t easy.

The agency is competing in a saturated real-estate market. There were 56,874 houses and condominiums for sale in January, according to the Arizona Regional Multiple Listing Service. The rental market is loaded with listings, too.

Prices for Phoenix residential land have softened as builders dump lots they no longer need. Prices for vacant commercial property, the bulk of ADOT’s for-sale land, are also eroding. Pete Wentis, a broker at CB Richard Ellis, said how low prices go depends on the location and the configuration and size of the parcel.

Typical buyers for small commercial pieces are convenience stores, banks, fast-food restaurants and gas stations, Wentis said.

But those businesses, he said, prefer square or rectangular parcels and some of ADOT’s pieces can be in unusual shapes.

Good buyers for those parcels are adjacent property owners who want to expand and businesses looking to develop projects like a mini-storage warehouse that doesn’t require its land be a specific shape, he said.

“We’re clearly going from a market that has been unprecedented in growth and value appreciation,” he said. “Now we’re on the backside (of the cycle). Nobody knows how deep this is really going to go. . . . It’s a very fragmented market right now, a lot of wait and see.”

All of that pressures ADOT to stay sharp in the market. The agency has started using newspaper ads and Internet sites to spotlight rental properties. It’s also considering publications such as apartment rental guides, ADOT spokesman Doug Nintzel said.

The bulk of the property the agency is now selling is left over from construction of the Santan Freeway and the Red Mountain Freeway. Most of the houses that are either rented or available for lease were bought for the planned South Mountain Freeway.

This year, the agency is buying property for four freeway projects: the South Mountain; the State 801 or so-called Interstate 10 reliever in the West Valley; Loop 303; and State 802, the Williams Gateway Freeway.

ADOT keeps the land left over from construction until planners decide it’s not going to be developed as part of the roadway. Then it’s up for sale through a bid-and-auction process. Property has also become available via failed projects.

For example, ADOT was left to auction about 300 properties in 1996 after plans for the Paradise Parkway collapsed.

The controversial plan for an east-west roadway to run south of the Camelback Road Corridor was killed in a funding squeeze.

And the move of the Pima Freeway from Pima Road to reservation land left ADOT with 194 houses and condos that it auctioned in 1994. ADOT began buying up the property in the 1980s, during the peak of another real-estate boom.

Jay Butler, head of realty studies at Arizona State University, said that under the best circumstances, ADOT would acquire empty land, start construction soon after and not have to worry about buying and managing property.

It doesn’t work out that way in a region where new development can fill empty land seemingly overnight.

“Ideally they could work with vacant dirt, but you have these urban projects and they have to buy property,” Butler said.

Catherine Reagor
The Arizona Republic
Jan. 17, 2008 12:00 AM
Home prices will stop falling. New- and used-home sales will pick back up. And the subprime-lending debacle will be over but not forgotten.

But it could take a few years for that to happen in metro Phoenix.

The prognosis for the housing market’s recovery came Wednesday at the Urban Land Institute Arizona’s Real Estate Trends conference. The real-estate think tank’s annual daylong gathering is one of the state’s biggest and most influential real-estate events. There, top economists, analysts, developers, brokers and investors present candid market predictions.

“The bottom of the housing market may occur in 2008 or 2009, but a full recovery will probably take three to five years,” said Elliott Pollack, an Arizona economist and real-estate investor. “This slowdown ends when housing prices stabilize, and they will. Unfortunately, the worst is still ahead of us.”

Because of foreclosures, metro Phoenix home prices could fall 30 to 35 percent from 2006’s peak and values won’t likely return to that high before 2015, said Gadi Kaufmann of the national real-estate advisory firm Robert Charles Lesser & Co.

Home sales could drop to 35,000 and home-building permits could fall to 20,000 this year, Kaufmann told the audience of more than 1,000. That’s more than a 30 percent drop from 2007.

Long-term, after 2010, the projections for population growth and changing demographics call for 40,000 to 42,000 new homes to go up in metro Phoenix.

“Many of us thought last year would be the worst for the housing market, but 2007 was just the beginning, due largely to the credit crunch,” said John Chadwick, president of builder Pulte’s Southwest operations. “But the long-term fundamentals are still good for Phoenix. This is still an affordable region for the West.”

Foreclosures are the big wild card for the housing market. A record 10,000 metro Phoenix houses were foreclosed on in 2007.

How many more houses go into foreclosure this year, how those add to the market’s oversupply of homes for sale and whether people who lose homes stay in the Valley all play a big part in when the market hits bottom.

“It’s going to be ugly, ugly, ugly this year,” Pollack said. “But in five years, this will all be a bad memory.”

Nov. 25, 2007 12:00 AM
Home prices in metropolitan Phoenix took a healthy drop in October.

No one who owns a home wants to hear that, including me. But real-estate analysts say home prices in many parts of the Valley need to come down after climbing too high during the frenzy of 2004-05. The decline will help the market stabilize, they say. More buyers will get off the fence, and many sellers will still make a profit.

The median price of an existing Valley house fell to $242,000 last month, reports the Realty Studies department at Arizona State University’s Polytechnic campus. That’s the lowest median price the market has posted since spring 2005. It’s an almost 10 percent drop from the median resale high of $267,000 the housing market hit in early 2006.

Market analysts have been saying for the past several months that Valley home prices were due for a correction as big as 20 percent. Most big builders in the Valley cut prices at least that much a few months ago to keep selling homes. Some say home prices still have some sliding to do, so October’s price drop is a move in the right direction, even if it’s painful.

Remember, before the 50 percent price run-up in 2004-05, metro Phoenix was long considered a hot housing market for having steady annual home price gains from 6 to 10 percent.

Arizona isn’t alone in its housing price declines. It’s keeping company with the other three states speculators invaded, prompting price inflation a few years ago: California, Nevada and Florida.

A new report from LoanPerformance shows 17 states had housing price declines from September 2006 to September 2007. California led the nation with a housing value drop of more than 10 percent. Arizona, Nevada, Florida and Louisiana had home price drops of more than 5 percent. Of course, Louisiana’s decline was due to Hurricane Katrina, not the real-estate speculating disaster.

Real-estate advice
ASU’s newest real-estate expert was recently asked by Forbes magazine for his best suggestions for fixing a troubled housing market.

Anthony Sanders, professor of real-estate finance at ASU, said mortgage fraud must be tackled. “Mortgage fraud, by both borrowers and insiders, must be identified and prosecuted in order for faith to be restored in the market,” he said.

Other top tips: expand Fannie Mae, Freddie Mac and Federal Housing Administration loans, slow construction and cut prices; and for buyers and sellers to get realistic on prices.

CEO with Arizona ties

Former Arizona home-building executive Sheryl Palmer has been named chief executive officer of the merged operations of Taylor Woodrow Homes and Morrison Homes.

Palmer, who was once Pulte’s Phoenix division president, has been picked to run the Florida-based home builder now called Taylor Morrison. The company is among the 20 largest home builders in the country.

Oct. 7, 2007 12:00 AM
Resales across metropolitan Phoenix were down again in August, but new-home sales held steady.

It could be a sign that the thousands of speculatively built homes across the Valley are selling while builders are pulling back on putting up more new ones. Both moves will help the resale market because fewer listings mean less supply.

The Phoenix Housing Market Letter tracked 3,110 new-home closings in August. It was the fifth straight month the figure didn’t lose any ground.

New-home prices have dropped since last year, which also is helping sales. The typical new Valley home price shot up to $285,000 during the frenzy of 2005, but this year slipped back to the $255,000 range.

But the report’s publisher, housing analyst RL Brown, said based on home-price increases during normal years like 2002 and 2003, the median price of a new home likely should be even lower, in the $220,000 range now.

Another good sign for metro Phoenix’s housing market is that listings seem to be flattening.

According to the weekly tally of David Blank of the Freedom Team at National Realty Brokers, the number of homes for sale in the Valley stabilized at just under 57,000. Part of that was due to the expiration of some listings at the end of the month, so next week will be telling.

The uptick in new-home closings and leveling off of listings hasn’t helped the Valley’s resale market yet. Early counts by real-estate agents show existing-home sales fell again last month.

And Brown is still giving the housing market a “code red” rating, but he can see it turning the corner in early 2008.

New housing chief

Sheila Harris is leaving the Arizona Department of Housing. The well-known housing advocate has been director of the agency since its inception five years ago.

She is firming up her future career plans, which likely will include some affordable-housing development in the private sector. Her contract is almost up, and Harris decided with her youngest child going to college, it was a good time to make a change.

The department’s incoming director is no novice to the state’s housing issues. Gov. Janet Napolitano has named Fred Karnas Jr. to the position.

Karnas, who recently joined the housing agency as administrator of its new Center for Housing Affordability and Livable Communities, began his career working for the Phoenix task force on homelessness. He then went on to become the first executive director of the Community Housing Partnership, a non-profit housing corporation.

In 1995, he joined the U.S. Department of Housing and Urban Affairs and worked on projects across the country.

Condo craze reverts

Metro Phoenix now leads the country for condo “reversions.”

Developers jumped on the condo-conversion craze in the Valley a few years ago, snatching up apartment complexes to turn them into for-sale condos.

But the demand for those condos slowed with the rest of the housing market. Now, more than 2,946 condos are being turned back into apartments in the Phoenix area, according to Real Capital Analytics.

Baltimore is second in the country for condo reversions, with 1,433 units going back to the rental market. Orlando is third, with 1,233 units.

The figures were published in the new PriceWaterhouseCoopers Korpacz Real Estate Investor Survey.

Not all condo conversions in the Valley have failed, however, and some developers are trying valiantly to sell the projects. People with big signs, and often wearing eye-catching costumes, still can be seen promoting condo-conversion projects on many Valley intersections.

Friday, September 14, 2007

MESA, Ariz. — With 4,240 recorded sales in August 2007, the local resale housing market continues its uninspiring march. The activity of August followed July 2007 at 4,330 sales and was below last year’s 5,685 transactions. The month of August brought the year-to-date total to 37,750 sales, which is well below the 47,515 for 2006 year to date and 78,935 sales for 2005 year to date.

“Primarily the role of August is to act as a transition from the heady days of summer to the lower recorded sales of the last months of the year,” said Jay Butler, director of Realty Studies in the Morrison School of Management and Agribusiness at the Polytechnic campus.

“However, there are increasing risks that the market could move lower than expected, driven by geopolitical risks and tighter mortgage underwriting guidelines. Both of these factors could make it increasingly difficult for people wanting to buy, but are not able to obtain needed financing. This point will be especially true in the move-up market,” Butler added.

The combination of large inventories and low interest rates have enabled people to purchase more expensive homes, which is one reason the county median price has remained fairly stable. But, recent troubles in the nonconforming mortgage market (mortgages above $417,000) have begun to adversely impact the move-up market. Last year, 39 percent of the resale homes sold for more than $300,000, while it was 37 percent for August 2007.

Foreclosures and new homes are providing a competitive alternative to the resale home in many areas of the market. New home builders continue to aggressively pursue buyers through incentives such as specially priced upgrades, free pools and gift cards. Thus, the 2007 resale housing market is showing signs of increasing weaknesses that could drive it below the current expectations of it being a good year.

Much like the ever-increasing sales activity of the last few years, the rapid improvement in price has disappeared. The median home price in August was $255,000 in comparison to $265,000 for July and last year’s $262,500. The most evident impact of lower prices is improved affordability. Although mortgage interest rates increased slightly from last year’s 6.1 percent to 6.2 percent, the lower median price allowed the monthly payment to decrease slightly from last year’s $1,350 to $1,330.

Changes in median prices can vary tremendously throughout the valley. For the western suburbs the median price has fallen from $240,000 in August 2006 to $217,450. On the other hand, homes in the North Mesa area have gone from last year’s $235,000 to $255,000. While some areas have declining prices, other areas are increasing or remaining fairly stable, especially the mature neighborhoods that are close to freeways, retail and schools. Since the greater Phoenix area is so large, the median price can range significantly from $680,000 ($697,500 in July) in North Scottsdale to $189,000 ($185,000 in July) in the Maryvale area of the city of Phoenix.

Although townhouse/condominium units have retained some popularity with seasonal visitors, investors and people seeking affordable housing, this housing sector has continually fallen from the 1,350 sales in March to 955 sales, while there were 1,100 sales for a year ago. Even with slower sales, the median home price increased slightly from $181,000 in July to $182,500 in August ($170,000 for August 2006).

The median square footage for a single-family home recorded sold in August 2007 was 1,740 square feet, which is larger than the 1,640 square feet for a year ago. The larger size further demonstrates the role of the move-up sector in the local housing market. In the townhouse/condominium sector, the median square footage was 1,115 square feet which is larger than the 1,090 square feet reported a year ago.

* In contrast to August 2006, recorded sales in the city of Phoenix decreased from 1,760 sales to 1,160 sales, while the median sales price decreased to $220,000 from $224,000 for a year ago. Since Phoenix is a geographically large city, the median prices can range significantly such as $189,000 in the Maryvale area to $314,750 ($330,000 in July) in the Union Hills area. The townhouse/condominium sector decreased from 395 to 300 sales, while the median price increased from $153,295 to $173,000.

* While the Scottsdale resale home market declined from 390 from a year ago to 360 recorded sales, the median sales price decreased from last year’s $598,500 to $559,375. The median resale home price is $680,000 ($697,500 in July) in North Scottsdale and $305,000 ($315,000 in July) in South Scottsdale. The townhouse/condominium sector in Scottsdale increased slightly from 205 to 210 sales, while the median sales price decreased from $266,000 to $242,900.

* Compared to August 2006, the Mesa resale housing market declined from 645 to 460 sales, while the median price fell from $240,000 to $237,000 ($242,000 in July). The townhouse/condominium sector also fell from 165 to 120 sales, while the median home price decreased from $159,950 to $152,000.

* Glendale decreased from 445 to 300 sales and the median sales price decreased from $255,000 to $240,750 ($238,500 in July). The townhouse/condominium sector decreased from 65 to 45 sales, while the median sales price decreased from $143,000 to $140,500.

* For the city of Peoria, the resale market declined from 280 to 205 sales, while the median price dropped from $270,000 to $257,500 ($264,950 in July). The townhouse/condominium sector decreased from 25 to 20 sales and the median price went from $165,000 to $162,500.

* In comparison to a year ago, the Sun City resale market remained at 90 sales, while the median sales price decreased to $175,000 from $200,000. Resale activity in Sun City West declined from at 50 to 45 sales, the median sales price decreased from $240,650 to $220,000. The townhouse/condominium market in Sun City declined from 50 to 45 recorded sales, while the median home price decreased from $139,000 to $124,000. In Sun City West, activity fell from 15 to 10 sales and the median sales price decreased from $175,750 to $130,000.

* The resale market in Gilbert decreased from 355 to 290 sales and the median sales price decreased from $320,000 to $300,000 ($314,500 in July). The townhouse/condominium market remained at 10 sales as the median sales price decreased from $210,000 to $180,000.

* For the city of Chandler, the resale market fell from 410 to 300 recorded sales, while the median sales price went from $308,000 to $282,800 ($308,375 in July). The townhouse/condominium market stayed at 40 sales and the median sales price declined from $182,000 to $163,250.

* The resale market in Tempe decreased from 155 to 115 sales, with the median sales price decreasing from $299,950 to $270,000 ($283,810 in July). The townhouse/condominium sector was stable at 70 sales, but the median sales price increased from $179,250 to $194,950.

* The highest median sales price was in Paradise Valley at $1,950,000 with a median square foot house of 4,220 square feet.

* In the West Valley, the following communities represent 10 percent of the resale market.
o Avondale fell from 130 to 95 sales with the median price moving from $254,325 to $223,275 ($222,500 in July).
o El Mirage decreased from 80 to 60 sales, while the median home price went from $212,750 to $185,000 ($180,000 in July).
o Goodyear went from 95 to 80 sales, while the median price decreased from $280,000 to $272,000 ($248,750 in July).
o Surprise decreased from 225 sales to 200 sales, with the median price decreasing from $250,000 to $232,500 ($234,900 in July).

Catherine Reagor
The Arizona Republic
Jun. 29, 2007 11:02 AM
The housing market hasn’t hit bottom yet, despite predictions of a possible mid-year rebound.

New figures show home building permits in metropolitan Phoenix fell last month to their lowest level since January. So far this year, single-family permits are 22 percent behind 2006’s pace.

This is 36 percent lower than the frenzied market peak of 2005. Last year, forecasts called for metro Phoenix’s housing market to start rebounding in early 2007. When that didn’t happen, the hope was for a comeback mid-year. Now real estate analysts are looking at 2008 for a pick up in housing.

“The Valley’s housing market is still looking for the bottom,” said RL Brown, publisher of the Phoenix Housing Market Letter. “It all hinges on the oversupply of homes now, not only new spec homes but resales that aren’t selling as consumers stand on the sidelines.”

Brown is revising his 2007 housing forecast downward. In January, he estimated home-building permits would hit 41,000 this year. But for the first five months of 2007, the permit tally stands at 17,172.

PHOENIX — A narrowing gap between what homes are listed for and what they actually sell for is being perceived as an early sign that the ailing housing market in Phoenix could be on its way to recovering.

“Both buyers and sellers are readjusting their expectations,” said University of Arizona economist Marshall Vest. “Buyers are coming back into the market with reasonable offers. More homeowners are pricing their homes to sell.”

The spread between what Phoenix-area homes sold for in March and what they were listed for is the narrowest it has been since mid-2004, according to Vest’s analysis of data from the Arizona Regional Multiple Listing Service. The gap hit a high in mid-2005.

“People are realizing this isn’t a fad,” said Margie O’Campo de Castillo of Arizona Dream Realty. “Listing prices have to come down for homes to sell, and buyers have to be realistic. It’s good to see it finally happening.”

Homeowner Thomas Herz realized there was a glut of homes for sale when he decided to sell his central Phoenix home earlier this year.

He originally wanted to list it for $340,000, the price he believes his three-bedroom home in a historic district is worth now.

Herz didn’t want to wait months while it sat on the market, however, and then have to go through the process of lowering his price one or more times. He and his real estate agent watched as the comparable sales in his neighborhood started coming in lower.

“After watching what was going on with the market, I wanted to list it at $319,000 but decided to go with $314,900, hoping it would sell faster,” said Herz. “Two years ago, homes like mine were selling in the high $300,000s. This house is a great deal for someone.”

Misty Williams, Tribune
Valley developers took out more home building permits for the fifth month in a row in March, though sales continued to sag.

View March permits and sales

Some 3,737 permits were issued in March, up from 3,630 in February but down 21 percent from the year ago period, the latest Phoenix Housing Market Letter from analyst RL Brown shows.“It’s a positive sign that the trend is upward,” Brown said.

Builders are also making good progress on getting rid of excess inventory, but the new home market is facing another hurdle — tightening lending standards, he said.

With a rising number of subprime borrowers beginning to miss mortgage payments, skittish lenders have done away with 100 percent financing, stated-income loans and other types of mortgage products, as well as requiring higher credit scores.

It’s becoming tougher for everybody to obtain financing, not just for first-time homebuyers, Brown said. “I think that’s the dark cloud that’s on the horizon,” he said.

Also in March, 3,674 new homes were sold, down 20 percent from the same month last year. Some 10,369 new Valley homes were sold in the first three months of 2007, compared with 12,536 in the same period in 2006.

The local market may start to rebound as early as the first half of 2008 if the economy continues to grow and the mortgage situation doesn’t get too bad, but those are some big “if’s,” said Ben Sage, director of national research firm Metrostudy’s Arizona division.

Loose lending standards and investors trying to dump speculative properties have contributed to the slowing market, but Arizona has tremendous job growth, he said.

“The strong economy is what will allow people to get that extra job or work with their banks” to keep their homes, Sage said. The Valley’s median new home price is also holding steady at $272,683, down less than 1 percent from March 2006, according to the Houston-based research company.

Grayson Steinberg
The Arizona Republic
Apr. 10, 2007 03:02 PM
Living at a shopping center with the regular slate of shops and restaurants might eventually bore anyone but not Alma Shapiro.

Shapiro, who lives in the Plaza Lofts at Kierland Commons, said she never gets tired of her routine.

“If I’m bored, I go sit in the park,” the retiree said. “Someone always sits down. I’ll have a conversation.”

Shapiro is one of about 50 residents living at the Plaza Lofts, a development of 30 units that opened about two years ago directly above Kierland Commons’ retail stores. Some people reside there only part of the year, while others live there full-time.

The lofts are part of an increasingly popular and prevalent trend of urban, mixed-use projects in the Valley that let people live, work and play in the same place. This trend in northeast Phoenix will include CityNorth and Palisene.

Residents include young singles, childless couples and second homeowners.

The trend is a resurgence of what the norm was in many cities for decades, said Daniel “Buzz” Gosnell, president of Dallas-based Woodbine Southwest Corp., Kierland’s developer .

“The town square was always the place that had the activity and the people living there,” Gosnell said.

Artist and Plaza Lofts resident Dale TerBush, 58, likes visiting Barnes & Noble, or spending an evening at the bar without getting into his car.

For Shapiro, her new lifestyle is a refreshing change from when she lived in a 3,800-square-foot house in Paradise Valley. The home was too big for her and the neighborhood wasn’t particularly social, she said.

“You get in your garage, back your car out and do your thing and you never see anymore,” Shapiro said.

She said Kierland feels like a large urban area with all the amenities but has a small town feel because she gets acquainted with many people that pass through there.

Getting to know one’s neighbors is also another incentive to live in a community like this, Gosnell said.

“You really do feel like you’re in a neighborhood,” said Gosnell, who used to live at the Plaza Lofts before leasing out his unit. “The elevator becomes your front porch.”

TerBush, who lives at Kierland about four months out of the year, also said he doesn’t miss the responsibilities of maintaining a home, like mowing a lawn.

Yet having a lot of amenities at one’s doorstep comes with a hefty price tag. The 54-unit second phase of the Plaza Lofts starts at about $500,000 and goes up to $2.5 million. Construction on the lofts is expected to be completed in November.

TerBush just bought a 2,200-square-foot, two-bedroom loft in the new tower for about $1.5 million to live in full-time.

Living at Kierland is worth the price, he said.

“It’s a very comfortable place to live,” TerBush said. “It’s like going back and living the way it used to be. In Kierland, there’s a main street.”

Gosnell said the expensive, upscale housing market in north Scottsdale and northeast Phoenix dictated higher prices than those that might prevail elsewhere.

“Every price bracket has its limitations,” he said. “Not everyone is going to live in a $100,000 home either.”

Glen Creno
The Arizona Republic
Mar. 28, 2007 12:00 AM
Permits for new-home construction are on the rise in Maricopa and Pinal counties, jumping 26 percent in February compared with the previous month and building on two straight months of gains.

Builders pulled 3,630 permits for new construction last month, according to analyst RL Brown, publisher of the Phoenix Housing Market Letter.

The total is still below what it was the same time last year, when the Valley was beginning to wind down from a housing boom in which record demand distorted yearly comparisons. And Brown cautioned that 18 percent of the February permit total was for condos. That means the crucial single-family-home market still has some work to do in its recovery.

Yet the increases could indicate that builders are finally making a dent in excess inventory and are looking to start new construction, Brown said. Excess inventory, both new and resale, has been one of the drags on the local housing market, and analysts have said clearing it is key to any correction.

“Inventory is not stagnant,” Brown said. “Permits have been down for so long. Obviously we are selling inventory.”

The skyrocketing prices of the housing boom scared away buyers and many walked away from contracts, leaving some builders with cancellation rates of 30 to 40 percent. Builders were faced with getting rid of those speculative, or “spec,” homes. Brown said the spec inventory is falling as more builders buckle down.

It’s unclear exactly how many spec homes are on the market. Some analysts say the number could be more than 10,000.

Doug Fulton of Fulton Homes said his company will pull more than 50 permits to get started on a new community in Gilbert. Otherwise, he said, Fulton will be mainly selling down a spec inventory of about 280 houses.

Fulton hopes the surge in permits isn’t just big public home builders cranking up local production so they can book 2007 sales. Builders would need to pull the permits now to have the houses built in time to sell before this financial year ends.

“I would like to see permits go down,” he said. “What are you doing? You are just generating more inventory. . . . I don’t like to see permit increases any more than I like to see additional homes listed on the MLS (multiple listing service). It’s a supply-and-demand issue.”

Brown’s report also noted that the number of closed sales was the lowest since May 2003. He said most new houses being sold in the Phoenix area these days are spec homes. Falling sales could mean either reduced demand or that a lot of the spec inventory has been sold.