That's back to 2003-04 prices

Metropolitan Phoenix was the home-builder capital of the country a few years ago, with more big national home builders working in this market than any other metro area. But the industry has shrunk with the housing market's downturn.

A few home builders, some Valley-based, have filed for bankruptcy. Some smaller home builders have closed their doors. And other builders, including a few large ones, have walked away from empty lots, model homes and entire subdivisions.

But most home builders aren't deserting the Valley. They are regrouping for current housing market conditions.
"The Valley's new-home market is in transition, and we are probably only halfway through that transition," said real-estate analyst RL Brown, publisher of the Phoenix Housing Market Letter. "Now, home builders are re-evaluating where and for what price range they can sell homes."

Brown estimates the median price of a new home will drop to about $195,000 when metro Phoenix's housing market is done correcting. That's back to 2003-04 prices.

What's hurting builders is the same thing that's hampering home buying for some: the credit crisis. Brown said it's much more difficult for builders to get the financing they need to buy land. Home buyers, of course, are facing the same dilemma in trying to get mortgages.

Last week, Woodside Homes was forced into bankruptcy by its creditors. But the trek to bankruptcy by home builders started late last year. In November, Engle Homes' Florida parent TOUSA filed for bankruptcy. Then early this year, Valley builder Trend Homes filed for Chapter 11 reorganization. It was purchased by Phoenix-based Najafi Cos. More recently, several Arizona subsidiaries of New York-based Stratland Enterprise filed for bankruptcy, as did Scottsdale-based Charlevoix Homes. A few home-builder land bankers, including Taro Properties of Arizona, also have gone into bankruptcy.

Several Valley subdivisions have been foreclosed upon, including four being developed by Phoenix-based builder Randall Martin Homes.

"Rumors abound about this builder and that builder," Brown said. "Subs aren't paid by a handful of builders. Contracts are renegotiated, layoffs occur. Divisions are consolidated. Management changed. Mortgage brokers close and a bank or two fail. Investigations into unlawful practices grow by the day."

But amid the "confusion, new and resale homes sell, appraisals are made, loans are approved and new families arrive in the region, just as they have for decades."