New Homes Sold at Foreclosure Prices
Tempe, AZ-On a recent Sunday afternoon at Ironwood Crossing, a Fulton Homes community in Queen Creek, Ariz., the parking lot to the sales office is full, the place is buzzing with activity as prospective homebuyers browse through the various models, and sales agents try to keep up with a level of activity that they haven't seen since December of 2005.
"People are tired of the hassles associated with foreclosures," notes Douglas Fulton, CEO of Fulton Homes. "The big investors and speculators are back, scooping up distressed homes and folks aren't getting the homes they want. With us, you just bring in a cashier's check and you're off to the races - ready to move into a brand-new home backed by a two-year warranty and Energy Star-certified features that will save you even more money on your heating and cooling bills."
He says people recognize it's time to buy because there are unprecedented deals out there right now.
Fulton Homes has sold 292 homes so far this year, 247 of those in the past 12 weeks. In the month of May, 110 homes were sold and 81 homes will close in June alone. While the number of home sales continues to rise in the Phoenix area, the percentage of foreclosure sales is dropping. According to the Arizona State University Realty Studies department, 9,980 home resales were recorded in May, up slightly from the 9,100 recorded in April. In May 2008, 7,210 existing homes were sold. Foreclosure activity in May represented 30% of all transactions, down from a recent high of 51% in February.
Nationally, pending U.S. home sales in April rose 6.7%, posting the biggest monthly jump in nearly eight years according to the National Association of Realtors, a sign that homes sales are finally coming to life after a long and painful housing slump.
Fulton attributes some of the latest activity to the $8,000 tax credit for "new homebuyers," which is actually someone who hasn't purchased a primary residence in the past three years. This incentive ends Nov. 30 and it's attracting many apartment dwellers and Gen-Y's into the market.
In an added twist, housing secretary Shaun Donovan said that first-time homebuyers can apply their $8,000 tax credit under the federal stimulus program toward the downpayment on a purchase of an FHA-insured home, thereby securing a lower interest rate. HUD cited National Association of Home Builders data showing that the first-time homebuyer tax credit will stimulate 160,000 home sales across the nation, with 101,000 of those sales being to first-time buyers and 59,000 to existing homeowners who will be able to sell their home to a first-time buyer.
While interest rates have crept higher in recent weeks, they are still attractively low while median home prices remain 42% lower than they were a year ago. According to the Phoenix Housing Market Letter from RL Brown, the median new home price fell to $190,000 in April, compared to $280,000 a year ago. And with a substantial inventory to choose from, buyers are finding themselves in the favorable position of taking advantage of these offers.
Mr. Fulton realizes that layoffs, work furloughs and bankruptcies will continue to impact the local housing market and another foreclosure wave may be on the way, but he's cautiously optimistic.