I expected when the number of builder specs homes in metro Phoenix finally started to decline last August, that the declines would gain momentum.
The number of spec homes has only drifted lower, from about 4,900 in August to about 4,400 now.
Despite their trashed stock prices and huge losses, homebuilders in Arizona at least are not aggresively cutting production.
The strongest downward pressure on Valley home prices is the continued overproduction of new homes by Arizona homebuilders.
At the rate they are going, it will take Arizona homebuilders over 2 years to get their inventory into the high end of the normal range.
I had expected that Arizona homebuilders might be able to get their inventory down into the reasonable range by the end of 2007… but now that seems very unlikely.
Apparently, inertia is the most powerful force on the planet.