One of the indicators often used to determine if the economy is improving or slipping is new home starts. Phoenix area home builders recently received encouraging news from a group of builders who met to discuss the Arizona new home market.

These builders estimate that the number of new homes to be built in the Phoenix area in 2012 will nearly double compared to what was built in 2011. With Phoenix being viewed as the trend setter for national residential real estate, this is being viewed as positive news for nation-wide recovery. Since each new home built creates jobs, it’s good news all-around.

They also discussed the role of investors in helping create demand for new homes, pointing out that investor activity has done much to clear out the over-abundance of homes that our market experienced for many years. More buyers are now trying to take advantage of historically low home prices and mortgage rates but are finding themselves outbid for resale homes by cash-paying investors. Many of these frustrated buyers are turning to the new home market, where the competition is not nearly as fierce.

Arizona home builders see new build home prices going up as current pricing is based on land costs that were lower. Now that home builders are feeling confident and eyeing land purchases you can guarantee that land costs will increase, hence new home prices will increase. Many home builders bought the land they have now when the market tanked, and can pass that savings along to the consumer. However, the land being purchased now is on the upswing and that too will be passed onto the consumer.