The Emerging Phoenix Real Estate Story ~ A Fresh Perspective from a Veteran Home Builder

11-Apr-2012

Last week, the Phoenix marketplace was hit with two housing reports. One was from a professor at Arizona State and the other was from the Cromford Report.

Today, we offer a real world perspective from a veteran home builder based in Scottsdale, Arizona, Michael Ripson of Ripson Homes. Ripson has been building homes since 2001 and recently re-launched Sonoran Acres, a 121 home subdivision, just outside of Surprise. His brand new Phoenix market analysis provides insight into the sudden supply challenges. In a nutshell, most large production builders have been caught flat-footed and will have difficulty responding to the appetite for new homes priced under $300,000.

Ripson homes is immediately prepared to respond to consumer demand.

For example, three years ago Sonoran Acres housing prices started at $265K. Today, our opening price on our homes at Sonoran Acres starts at just $199,900 on acre lots. Three years ago, 0% down financing had been removed from consumer availability; Sonoran Acres now offers 0% down financing to qualified buyers. Three years ago, supply completely outweighed demand. Today, demand dramatically outweighs the supply at homes priced under $300K.

Today, we are releasing a market analysis from a homebuilder's perspective. Ripson Homes is primed and ready to build to meet consumer demand. Meanwhile, larger homebuilders appear to be unprepared.

For media interviews or questions, please contact Lisa Ripson at 312-952-7394.

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METRO PHOENIX HOUSING MARKET ANALYSIS
Executive Summary
By Michael Ripson
CEO of Ripson Homes
April, 2012

Current Market Status -- Supply and Demand

For homes priced at $300,000 and below, the Metro Phoenix housing market is in a severe imbalance -- and theunusual aspect of this present imbalance (at least when viewed through the prism of the recent recessionary years) is that the scale is tilted strongly in favor of the supply side. Historically, a housing market is considered to be in equilibrium when there is a three to six month supply of available homes. Presently, at the price point of $300,000 and below, the supply is less than 30 days. This represents a dramatic shift which has occurred quite recently -- just over the past several months -- and is due to four primary factors:

  1. There has been a significant decline in the number of foreclosures and short sales, which have dominated the supplysince the beginning of the recession.
  2. There has been a nearly simultaneous increase in demand due primarily to enhanced buyer confidence, which is higher than at any time since the beginning of the recession.
  3. Though prices are improving, many traditional homeowners remain "underwater" and thus are not yet in a position to place their homes on the market.
  4. New construction at the wholesale level (large production builders) have been caught off-guard by the shift and will take months to respond.

Immediate Market Outlook

The Metro Phoenix housing market has a history of recovering far more rapidly from a recession than initially predicted by many experts. This particular market recovery will be no different. In the near term, the market imbalance in favor of sellerswill continue to put significant upward pressure on prices. These price increases will most assuredly occur and will be dramatic in the coming quarters, and the degree and pace of the upcoming recovery would be even more remarkable but for the following contravening factors:

  1. The "shadow" inventory of foreclosed homes: Banks which have previously managed their foreclosure inventory so as not to dump large volumes of homes and further depress prices will opt to bring any such warehoused inventory to market more quickly due to the more favorable prices. However, this "shadow" inventory of banks will not significantly allay price increases as such shadow inventory is largely over-stated.
  2. Future foreclosures and short saleswill continue to be a negative factor in the market until such time as prices improve to the point where homeowners can become traditional sellers, and thus place their homes on the market only if and when they choose.
  3. Though buyer confidence has increased dramatically in recent months, such confidence must be actuated by the ability to obtain financing to fulfill the buyer's dreams. However, bank underwriting constraints remain more rigorous than at any time in memory due to the pendulum which has over-responded to the excesses of the previous decade. Underwriting guidelines will serve as a significant governor on demand until such time as the pendulum naturally swings back towards equilibrium.

Market Opportunity - Sonoran Acres

Consistent with Ripson Homes' decision in January to re-launch Sonoran Acres, Sonoran Acres is ideally positioned to respond to the present-day lack of supply and pent-up demand. Located just outside of Surprise, Arizona in metropolitan Phoenix, Sonoran Acres offers brand new homes on acre lots starting at just $199,900. Sonoran Acresprovides the following advantages to buyers frustrated by the existing supply of available homes for sale:

  1. Prices starting at $199,900 for a 2,218 square foot home on a full acre lot.
  2. A brand new home on an acre lot, offering the choice of four spacious floor plans up to 3,506 square feet … including one floor plan with a basement option.
  3. A two year warranty from a company with a reputation for custom quality … providing peace of mind.
  4. A family owned company with a history focused on customer service … providing a pleasant purchasing and building experience.
  5. 0% down financing to qualified buyers … financing that is otherwise virtually unheard of in today's environment.

www.SonoranAcres.com

www.RipsonHomes.com

Ripson Homes – The Back Story

With more than two decades of experience in multi-billion dollar real estate investment and development throughout the United States, Michael Ripson harnessed that knowledge and started Ripson Homes in 2001. Mr. Ripson’s goal was simple – to provide the unique opportunity for people to enjoy a home they might not otherwise be able to realize. Based upon that founding principle,Ripson Homes has developed a reputation for creating master dwellings with the distinctive vision of maximizing quality and value, while providing an enjoyable experience abounding in integrity and service. Such is the essence of our very being and our core values: Integrity, Quality, Value and Service. Welcome to Ripson Homes.

Michael Ripson

For a long time, Michael Ripson has worked the dirt. As a boy on his parent’s Iowa farm, Michael busily helped to work the earth, pulling button weeds, sticking thistles and otherwise assisting to grow the corn and beans that would eventually feed families across the globe (and not to fear, there was a goodly amount of wiffle ball with friends and brothers, too). Today, Mike is stilltoiling the earth – but now he’s building homes for families.

For more than two decades, Michael Ripson has honed his business and real estate skills working for some of the nation’s leading real estate companies, including the Principal Financial Group. In his role as Assistant Managing Director, Real Estate Equities, Mr. Ripson was responsible for a $1.6 billion portfolio of real estate assets. Mr. Ripson’s accountabilities included oversight of the planning, development, construction and management of those real estate assets, as well as oversight of the purchase, sale and leasing of such properties. The investment returns achieved by Mr. Ripson’s oversight of those assets remain virtually unparalleled.

In2001, Michael Ripson realized his lifelong dream of becoming an entrepreneur when he launched Ripson Homes. His vast understanding of the real estate market coupled with his keen business sense provides clients anopportunity to live in a home they might not otherwise be able to realize. Michael’s passion for seeking out the potential of any given home-site and maximizing its potential from the standpoint of views and finishes is a rare gift for a home builder.

Michael’s philosophy when building any home, Signature or otherwise, is to build it as if he was going to live in it. Each Ripson Home is built with Integrity, Quality, Value and Service.