Phoenix 'Dealbusters' Include 'Dump And Run'

The Arizona Daily Sun hasthis report on Flagstaff's housing bubble. "The number of for-sale housing units brought onto the market in the city of Flagstaff last year was up substantially from 2004. But the extra supply still didn't keep pace with demand, as costs here skyrocketed. In total, 634 new housing units were built in 2005. The only year in the past five that topped that number was 2003, when 733 units were built." "That year, the median housing price was $212,000 and the median family income was about $51,800. In 2005, the median house price hit $300,000 but the median income hasn't increased significantly since 2003." "Some other factors that played into this year's market boost included...increased traffic from second-home buyers, which has grown to about 25 percent since 2000, and Flagstaff's ever dwindling land supply." And the Arizona Republic had this, "Rising prices, government bottlenecks and construction delays didn't stop the market from racking up 63,570 permits for new homes, about 4.4 percent more than the 2004 record, analyst RL Brown said. Brown made his remarks at a market forecast Monday that drew more than 1,000 builders, developers, land brokers, bankers and government officials to a north Phoenix resort." "Housing forecasts are drawing particular attention these days as the Phoenix market cools and the players look for consensus on what happens next. Predictions at another recent housing forum said that from 35,000 to 45,000 homes would be built in the Valley this year, a much steeper decline than the one Brown foresees and one that could damage a local economy that relies on housing as its top industry." "Brown said the median price for a new home in the Valley rose $98,000 to $299,000 in 2005, increases he said would not be sustainable. Brown said, an acre of land that cost $7,000 to $8,000 rose at the beginning of last year sold for $80,000 at the end of the year. Still, he said, builders' margins were running 20 to 25 percent in the Valley, a record for the area." "Brown cast some skepticism on the city's growing condominium craze. He said some apartment buildings that are being converted to condos have little chance of selling well and predicted that 15 to 20 percent of the announced 'vertical' or high-rise condo projects will be built. 'Condos will not become the dominant lifestyle choice for consumer in this marketplace,' Brown said." "He expects that the shakeout of speculators in the resale market will continue. Among Brown's big worries, or 'dealbusters' that could derail the market..a mass exodus or 'dump and run' by housing investors."