Fulton Homes CEO warns permits, not closings, predict future
TEMPE, Ariz., Nov. 12, 2013 /CNW/ - While some new homebuilders may be having illusions of grandeur cashing in by building in the Phoenix housing market, one Arizona homebuilder warns predictions of returning to the peak housing market of 2005 are ill-advised and hide dangers for potential out-of-state and untested builders.
Although some housing experts are trumpeting the 23 percent jump in new home closings in the Phoenix market through September, Doug Fulton, CEO of Tempe, Arizona-based Fulton Homes, says if you want to predict the future of housing in Phoenix do not look at new home closings; look at the number of new permits issued by month.
"New permits act as one of the true barometers for analyzing the Phoenix housing market," Fulton said. "After the expected bump in the first quarter of this year, the number of new permits has flattened since April. While the overall number of permits for new homes is up 8.9 percent this year, September's 897 new permits is the lowest number since December 2012."
National publications reporting on the housing market in Metro Phoenix are focusing on the price appreciation, not units closed.
According to RL Brown, in Metro Phoenix there were 11,615 permits in 2012. Fulton believes the number of permits will only increase slightly for 2013, and will certainly not come close to other predictions of nearly 15,000 new permits. Fulton says that type of misleading information will result in low weekly sales absorptions, creating dismal market share percentages for builders considering setting up shop in Phoenix.
"Other homebuilders need to realize that there is no getting back to the peak of 2005 and 2006," Fulton said. "At that time if you could fog a mirror with your breath you got a mortgage. We do not want to get back to the peak; that was an anomaly in the housing market that was created by imprudent and careless credit requirements. That foolish behavior wrecked the U.S. economy and negatively affected financial institutions worldwide.
"We are a long way from getting back to what we would call a normal market," Fulton added. "We're not even back to new home closing levels of 1990, the time of Charles Keating and the savings and loans collapse. There is only so much market share to go around. Any prediction that the Phoenix market is a gold mine could lead to new homebuilders generating very dismal results for Wall Street."
About Fulton Homes
Founded in 1975, Fulton Homes is the largest privately owned and family operated builder in Arizona. Headquartered at 9140 S. Kyrene Road in Tempe, Fulton Homes has built more than 20,000 high-quality single-family homes over the past 35 years in the Phoenix area. To learn more about Fulton Homes, visit www.fultonhomes.com.
SOURCE: Fulton Homes
For further information:
Glenn Swain, 602-530-9900, cell 602-738-1150, [email protected]
PRN Photo Desk, [email protected]