Home under construction-does the builder have enought $ to finiish it?      The Greater Phoenix real estate market downturn continues to make new home building a tough business.  Some developers have put everything on hold, some have lost land and unfinished homes to foreclosures, some have ended up in bankruptcy court, while others still hang on sharing the sales of about 1,900 homes/month.
     Buyers need to be aware of potential pitfalls when purchasing a home from a home builder in this environment.  If the builder should shut down or file for bankruptcy protection before the buyers have closed on their new home, the buyers RISK loosing all monies they have put down for their new home.  Buyers should insist on their earnest monies and any other deposits be held at the Title Company and NOT released to the new home builder until after the home closes for their protection.  Most builders historically have had the Title Company release those monies directly to them before the home closes.
     Should you not realize how bad the problem is in our area, lets take a look at what has happened to some of the players in this once robust industry in Phoenix:
  • Randal-Martin Homes - their subdivisions were foreclosed, and they have basically shut down for now.
  • Woodside Homes - Bankruptcy court
  • Engle Homes -  parent company in Bankruptcy court
  • Trend Homes - Bankruptcy court
  • Charlevoix Homes (aka Copperleaf Communities) - Bankruptcy court
  • Strattland Homes - Bankruptcy court
  • Royce Homes - walked away from 800 lots and 47 completed SPEC homes in Florence and Coolidge
  • Brown Family Communities - shut down all operations
  • Zacher Homes - shut down, with several of their communities in foreclosure process and one high profile development in the planning process along Tempe Town Lake south shore is now for sale
  • Cambria Homes - community in foreclosure process
  • Element Homes - communities in foreclosure process
  • Elite Homes - communities in foreclosure process
  • Hacienda Builders - communities in foreclosure process, builder shut down operations
  • Jackson Properties - communities in foreclosure process
  • Maltabano Homes - some communities in foreclosure process
  • Santa Anna Homes - community in foreclosure process
  • Chateaux on Central - a upscale unfinished townhome community in downtown Phoenix is in bankruptcy court due to Mortgages Lmtd.
  • Centerpointe in Tempe - an unfinished hi-rise development in Tempe sits idle due to the construction financing lender (Mortgages Lmtd) ending up in Bankruptcy court. 
The list gets longer, the above are the larger builders in the area, there are a number of smaller builders that have projects in limbo all over the valley.  There are builders that will survive this market downturn and build some great homes during the period, however the term BUYER BEWARE is a term to remember if you are purchasing a new home.  On the bright side, now is the time to get the best pricing and incentives, so please don't let this stop you from finding your dream home, just make sure to have a good Realtor (I happen to know one!), do your research, and insist that your money be kept in Escrow until your home closes.