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Tall. You are not understanding the cost structure. For starters builders picked up land for a steal a couple years back. Land prices in the outer burbs are a fraction of what it costs in many northern cities.
Next, there are a lot of cost cutting going on in Phoenix that does not happen in other parts of the USA.
Here are a few:
1.) The windows are sliders type. They are JUNK. I doubt the builders pay $150 a window on average. The windows alone is a $10K-$15K savings over a Washington home. It's rationalized that the temperature differential (from cold to hot) isn't nearly as severe as in the north.
2.) A typical track home doesn't use sheathing on the whole house (less than 1/2). The sheathing is only to handle the weight / stress of the stucco and bolting together the corner walls. It's rationalized that the winds are not that strong enough to need full sheathing.
3.) Most homes are built with 2x4 construction not 2x6.
4.) The track homes use sheet rock under the porch soffits. I'm not kidding, "Outdoor" sheetrock! I just spent $3K to remove that and replaced it with tong and groove wood. As a side note, it rained on my pile of "outdoor sheetrock" and it fell apart and absorbed a lot of water.
5.) Building labor costs of the track homes are a 1/3 of what they are in Washington State or MN. I would guess the average wage is $9 an hour for labors.
6.) The baseboards are not wood, they are more or less pressed cardboard that are painted white. No need to pay attention to nice mitered corners. They simply caulk in a bunch or DAP and wipe smooth. You don't see wood work around windows either. At the end of the day it does look great.
7.) The electrical codes are relaxed here. You get one outlet in the garage. You will have 1 GFI to run 3 key bathroom outlets.
8.) The stucco is placed on top of foam insulation. So if you are following, if you punch the wall you will be at the interior sheet rock with little force.
9.) The sheetrock uses knockdown texturing on every wall and every ceiling. It's the lowest cost approach.
I can go one for another 20 items. Non-custom cupboards, small lots, inexpensive ceramics, etc. That said, the homes look great. But rest assured builder are in full swing and profitable in every area of the Valley.
Good information but I've been working for 3 different engineering/construction contractors the last 19 years and am familiar with different grades and cost structures in construction although we have been doing industrial rather than housing construction. I also own 2 houses in Phoenix and 2 in Washingtons state where I live so I'm familiar with some differences.
What I've been trying to discuss is the housing shortage and why Phoenix still has a dearth of new construction to meet the demand. I also understand that Phoenix led the nation in construction dollars for many years and overbuilt in 2004-2007.
I still don't think you'll see construction of houses to meet demands until prices there go up at least 33% more.
Tall. You are not understanding the cost structure. For starters builders picked up land for a steal a couple years back. Land prices in the outer burbs are a fraction of what it costs in many northern cities.
Next, there are a lot of cost cutting going on in Phoenix that does not happen in other parts of the USA.
Here are a few:
1.) The windows are sliders type. They are JUNK. I doubt the builders pay $150 a window on average. The windows alone is a $10K-$15K savings over a Washington home. It's rationalized that the temperature differential (from cold to hot) isn't nearly as severe as in the north.
2.) A typical track home doesn't use sheathing on the whole house (less than 1/2). The sheathing is only to handle the weight / stress of the stucco and bolting together the corner walls. It's rationalized that the winds are not that strong enough to need full sheathing.
3.) Most homes are built with 2x4 construction not 2x6.
4.) The track homes use sheet rock under the porch soffits. I'm not kidding, "Outdoor" sheetrock! I just spent $3K to remove that and replaced it with tong and groove wood. As a side note, it rained on my pile of "outdoor sheetrock" and it fell apart and absorbed a lot of water.
5.) Building labor costs of the track homes are a 1/3 of what they are in Washington State or MN. I would guess the average wage is $9 an hour for labors.
6.) The baseboards are not wood, they are more or less pressed cardboard that are painted white. No need to pay attention to nice mitered corners. They simply caulk in a bunch or DAP and wipe smooth. You don't see wood work around windows either. At the end of the day it does look great.
7.) The electrical codes are relaxed here. You get one outlet in the garage. You will have 1 GFI to run 3 key bathroom outlets.
8.) The stucco is placed on top of foam insulation. So if you are following, if you punch the wall you will be at the interior sheet rock with little force.
9.) The sheetrock uses knockdown texturing on every wall and every ceiling. It's the lowest cost approach.
I can go one for another 20 items. Non-custom cupboards, small lots, inexpensive ceramics, etc. That said, the homes look great. But rest assured builder are in full swing and profitable in every area of the Valley.
And worthy of note, some of these shortcuts and cost saving measures are coming back to bite the builders in the butt with defect/code violation lawsuits.
And worthy of note, some of these shortcuts and cost saving measures are coming back to bite the builders in the butt with defect/code violation lawsuits.
I was thinking the same thing. I'm glad that my company understands this and insists on meeting and exceeding all codes in an attemp to avoid injuries and lawsuits.
Not trying to disparrage the comments made as they were valid to the point on cost but there's a point of diminishing returns as you lower cost.
And worthy of note, some of these shortcuts and cost saving measures are coming back to bite the builders in the butt with defect/code violation lawsuits.
Since I have never lived up North in the US, I'm learning every day. How can there be such a BIG difference in construction quality between here and there? - Thanks.
4.) The track homes use sheet rock under the porch soffits. I'm not kidding, "Outdoor" sheetrock! I just spent $3K to remove that and replaced it with tong and groove wood. As a side note, it rained on my pile of "outdoor sheetrock" and it fell apart and absorbed a lot of water.
I just looked under my porch and my home that was built in 1993 has textured sheet rock on the bottom, what a surprise!!!
The weather in Az is so mild that it still looks great after 20 years with no apparent damage.
I am amazed at how well properties age here , I guess it is a positive thing that homes here are cheap to build and still age well because the of mild weather.
I think house prices are still stifling more development in the Phoenix area along with lending restriction. I did a quick search on Zillow on median house prices in Phoenix area :
If I were a builder looking at thse prices, I might figure to make a profit in Chandler, Gilbert, and Scottsdale but pretty lean in the other areas and even Gilbert & Chandler are a bit low considering the number of newer houses you'll be competing against.
For comparison, I compared a few areas in Seattle area:
Seattle - $397K
Bellevue - $489K
Kent - $209K
Quote:
Originally Posted by kremit
Thank you. Took the words right out of my mouth. Anything in the 100K range in Chandler is foreclosed, fixup, or rare. Most of the 15+ year old homes in my area are at least 200K.
There is still too many homes in the market. All cities have this problem. New home shortage yes, used no.
Quote:
Originally Posted by Tall Traveler
Good information but I've been working for 3 different engineering/construction contractors the last 19 years and am familiar with different grades and cost structures in construction although we have been doing industrial rather than housing construction. I also own 2 houses in Phoenix and 2 in Washingtons state where I live so I'm familiar with some differences.
What I've been trying to discuss is the housing shortage and why Phoenix still has a dearth of new construction to meet the demand. I also understand that Phoenix led the nation in construction dollars for many years and overbuilt in 2004-2007.
I still don't think you'll see construction of houses to meet demands until prices there go up at least 33% more.
Since I'm not a construction expert nor am I a Realtor, I have a question about this discussion. Why the emphasis just on new home builds? My Realtor told me that the problem with housing shortage in Phoenix right now is that a lot of people are under water and are waiting for the prices to come up just a little so they don't lose their arses! Plus, per some of this discussion, there's a mistrust of some of the ways new homes are built: I know some people who moved from an older home (circa 1980 built) thinking they were making a move up to a newly built home. They were sorely disappointed in the construction and wished they had kept their older, more solidly built home. Problems with electrical, plumbing, wall construction, etc. have been a huge hassle. And even though there's a warranty, who wants to keep dealing with construction issues? You think you buy a new place it will all be hunky dory.
Personally, I bought an older house in an older subdivision because my home is more solid; the neighborhood is established so I knew what I was getting; there's no dang HOA to control every little thing and charge me for it; the yards were bigger; and the price per square foot was lower. I spent months looking at a lot of new homes and now I go back to those areas and I'm really happy with my decision. Still, I'm in a place where it may be time to move to another city... so I'm waiting till the market improves a little before listing. (Or I may decide to just rent it out.)
Since I'm not a construction expert nor am I a Realtor, I have a question about this discussion. Why the emphasis just on new home builds? My Realtor told me that the problem with housing shortage in Phoenix right now is that a lot of people are under water and are waiting for the prices to come up just a little so they don't lose their arses! Plus, per some of this discussion, there's a mistrust of some of the ways new homes are built: I know some people who moved from an older home (circa 1980 built) thinking they were making a move up to a newly built home. They were sorely disappointed in the construction and wished they had kept their older, more solidly built home. Problems with electrical, plumbing, wall construction, etc. have been a huge hassle. And even though there's a warranty, who wants to keep dealing with construction issues? You think you buy a new place it will all be hunky dory.
Personally, I bought an older house in an older subdivision because my home is more solid; the neighborhood is established so I knew what I was getting; there's no dang HOA to control every little thing and charge me for it; the yards were bigger; and the price per square foot was lower. I spent months looking at a lot of new homes and now I go back to those areas and I'm really happy with my decision. Still, I'm in a place where it may be time to move to another city... so I'm waiting till the market improves a little before listing. (Or I may decide to just rent it out.)
It's both the fact that people underwater can't or won't sell their homes together with the fact that housing starts are far below the projected yearly needs are the key factors in the inventory shortfall. The focus on new construction in the threads was in responses to some threads that has articles highlighting that Phoenix metro has been far below the average number of new construction starts to satisfy the needs of the growing population for the last 5 consecutive years and that's going to add up to a huge shortfall if that's not addressed.
It's both the fact that people underwater can't or won't sell their homes together with the fact that housing starts are far below the projected yearly needs are the key factors in the inventory shortfall. The focus on new construction in the threads was in responses to some threads that has articles highlighting that Phoenix metro has been far below the average number of new construction starts to satisfy the needs of the growing population for the last 5 consecutive years and that's going to add up to a huge shortfall if that's not addressed.
I think there is also a psychological factor. People are much more cautious now than before the watershed 2008 financial crisis, and that includes corporate management. There won't be any more wild spec building (and buying) as in the bubble years for a long time. I haven't met anyone telling me they binged on tech stocks since 1999/2000.
They were sorely disappointed in the construction and wished they had kept their older, more solidly built home. Problems with electrical, plumbing, wall construction, etc. have been a huge hassle. And even though there's a warranty, who wants to keep dealing with construction issues?
Building codes get more difficult each year not easier so I think the majority of new homes are solid well built homes that are much more energy efficient than older homes,it sounds like your friend just got a lemon.
The reason the focus is on new homes is that existing homes do not add to the inventory since most people that sell an existing home will end up occupying another home here in the Phoenix area so it ends up being a wash instead of creating new inventory.
The housing shortage will keep our economy here in AZ from recovering as quickly as it could and if interest rates skyrocket like they did in the days of Democrat Jimmy Carter we could see a depressed housing market instead of a solid well sustained housing boom that restores Arizona to its 1st place growth position.We need momentum and that will not come from a severe housing shortage.
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