The first article, Better days are forecast, but at a cost, from the Arizona Republic, reports that housing analyst RL Brown told a crowd of about 1,300 that Phoenix's new home market will get better after this year, but only if builders get serious about reducing spec-home inventory and prices and making a bigger commitment to service. Brown estimated that as many as 25,000 unsold spec homes are sitting on the market, the result of buyers backing out of deals when they couldn't sell their existing homes. Brown reported that the Valley finished 2006 with a building permit total of 42,460, down from the over 60,000 permits pulled in 2005. Brown expects permits to total 41,000 this year and 48,000 in 2008. They expect the market to hit 47,000 permits in 2009 and 50,000 in both 2010 and 2011. Even with the reduced building, Brown expects that Valley will continue to be one of the country's top housing markets.
The second article, Existing home sales tumble in 2006, from MSNBC.com, reports that sales of existing U.S. homes were down 0.8 percent in December, and for the year, sales fell by 8.4 percent from 2005 levels, the biggest decline since 1989. The information was released by the National Association of Realtors. Even with the sales drop, the median price of an existing home sold in 2006 rose 1.1 percent. The median price rose 12.4 percent in 2005. Economist say they believe the low point for housing has been reached and they are forecasting a slow rebound in 2007. Because of that optimism, analysts don't believe the slump in housing will drag the overall economy into a recession. David Lereah, chief economist for the Realtors, said that in 2005, 40 percent of the market represented purchases of second homes and investors buying homes looking to resell them for quick profits. He said that speculators had now left the market and that should leave sales at a more sustainable level.