Following decades of growth measured mostly in new prisons and mobile homes, any cooling hitting the Pinal County home market is a matter of perspective. And from the existing homeowner's perspective, it hurts.

After last year's record 18,749 single-family new-home building permits issued by Pinal County and its municipalities, 2006 is on pace to see 16,571 permits issued. Although at first blush that may seem to fit the perception of a cooling market, it still means more new homes in a single year than the county saw during some entire decades of the 20th century.

"This is a cooling like it was 113 degrees yesterday, and its 106 degrees today," said Jordan Rose, a development attorney with clients in Pinal County. "It's still burning hot in Pinal County."

But to get new residents into all those new homes, home builders have recently started slashing prices and offering perks from free pools to cabinet upgrades.

And existing residents, from the investors determined to still make big bucks to overleveraged homeowners who need to sell at a certain price, are feeling the fallout. It is now not uncommon for buyers to get a better deal on a new home than on the 2-year-old version of the same model down the street.

Similar themes are likely playing out in the newer neighborhoods of fast-growing areas of Maricopa County, like east Mesa, south Phoenix and the West Valley. But in Pinal County's newest and fastest-growing communities like Maricopa and the Santan area, where nearly every house is either brand new or no more than a few years old, it's being seen on nearly every block of every neighborhood.

As a result, resale-home sellers are grudgingly cutting prices by tens of thousands of dollars, and their homes are still sitting unsold for half a year.

Titus and Angel Metzger put the Maricopa home they bought in July 2004 on the market in January so they could move up to a bigger home in the western Pinal County city. A second real estate agent and $40,000 in gradual price cuts later, they still have a Century 21 sign in front of their home and only a few lookers have stopped by.

"If we're not able to sell it, we can't have two mortgages," Angel said. "So, we'll have to sacrifice the new house."

Ironically, builder D.R. Horton has slashed the price for the larger new home they want to buy, making it now cheaper than what they're asking for the smaller, older home they're trying to get rid of.

The Metzgers said it would be hard for them to cut their asking price much more than the current $229,000. If they get their asking price, they'll walk away with $30,000.

Bob Rucker, president of the Arizona Regional Multiple Listing Service, said 4,403 homes were listed for sale in Pinal County recently, with the vast majority being resale homes.

Sales volume for existing homes has fallen for the past four quarters, while previously surging median prices slipped by $10,000, to $211,500, from fourth-quarter 2005 to first-quarter 2006.

Santan-area resident Karen Marsh put her 2-year-old home on the market in April and has seen only a handful of people walk through.

"It's just so frustrating," Marsh said. "We finally quit doing open houses because we would have to go out for the day and no one would show up."

The market is pitting Marsh against her neighbors. There are six other homes for sale on Marsh's block alone. According to a neighborhood real estate Web site, there are nearly 250 homes for sale in Marsh's San Tan Heights development.

On top of that, there are brand new homes being offered just blocks away.

"I think part of the reason is we're out so far, and with gas prices, people just don't want to because of the prices of gas," Marsh said. "I figured it would take a little while, a month or two, but not this long."

Scott Helsel, a Maricopa real estate agent with Prudential Arizona Properties, said builders are knocking prices down by $100,000 in some cases to attract buyers and offering real estate agents up to nearly 10 percent commissions.

Such aggressive tactics are scaring homeowners struggling to sell, Helsel said.

"For sellers, it's a shocking thing," he said. "They think they're losing money when they're really just making less. Ultimately, (lower prices) will attract people back to Pinal County."

Banking on that, speculators are still snatching up vacant land and developers are still expected to build thousands of new homes in Pinal County this year.

The new-home sales-market volume was up in first-quarter 2006 compared with the same period in 2005, as was the median new-home price.

After five straight years of increases, midyear numbers show that Pinal County and its municipalities are on pace to issue about 2,000 fewer single-family building permits in 2006.

"There's no question about it, Pinal County is in a cooling period like the rest of the metropolitan area," Valley housing analyst RL Brown said.

He said after 2005's big price bump, buyers are now more patient and waiting for bargains. They're in the driver's seat because so many owners are trying to sell, leading to a glut.

Jay Butler, director of the Arizona Real Estate Center at Arizona State University, said part of the reason for the glut of resale homes on the market may also be because Pinal County was more affected by investors who bought houses hoping to make a killing and are artificially keeping their asking prices high.

Entry-level home buyers have been hurt by surging prices and frustrated by rising mortgage rates, limited shopping opportunities, high gas prices and congested commutes, he said.

"The big issue is that prices were up," Butler said. "They have to make them more affordable."

Developers and community leaders agree.

Developer Stacey Brimhall, president of Langley Properties, also said investors in homes drove up the market.

Now, he said, people are looking to buy homes they'll really live in.

He sees transportation problems as a long-term market killer in areas of Pinal County such as Santan, but he predicted the overall county housing market will reheat as home prices stabilize.

"We're kind of like spoiled children in a toy store, and we're throwing a fit and stomping our feet when Mommy finally said, 'No,' " Brimhall said

Pinal County is still the future of the Valley's housing market, development attorney Rose said. It will attract about half of all new home buyers over the next 15 years, she predicted.



She said what's happening is a reality check for home sellers, buyers, builders and developers as they return to a focus on home affordability in the youthful market.

 

Realty agent's status climbs

Scott Helsel never figured on being a real estate agent.

But Prudential Arizona Properties has been lucrative for him. Especially with home builders in the Maricopa area so desperate they're offering real estate agents double or triple commission rates to bring them clients, knocking prices down by tens of thousands of dollars or tossing in free pools and other upgrades.

Home builders were so confident last year that many stopped offering commissions for real estate agents to bring them buyers.

"This year, they really need us," said Helsel, a Maricopa resident. "They're giving us lunches and gifts. If they want to pay a 7 percent commission, sure I'll take it."



But although the home-builder side of his business is up, the homeowner side has slowed.

He said homes now linger on the market 90 to 120 days, instead of selling in a matter of weeks, as home sellers battle to maintain their lofty prices and builders offer sweetheart new-home deals that undercut them.

Helsel said his clients aren't yet desperate, but some are becoming frustrated by having to slash their resale home prices.

 

Santan house sits for months

Karen Marsh has lived on pins and needles for months. Every time the phone rings, it could be a potential buyer. But only three people have gone through Marsh's house since it was listed in April.

She struggles to keep her house tidy with three kids running around. She has repainted all the rooms white. And, recently, she dropped her listing price $30,000.

"It's just so frustrating," Marsh said. "We finally quit doing open houses because we would have to go out for the day and no one would show up."

Marsh and her family have lived in San Tan Heights, in the Santan area of Pinal County just south of Queen Creek, for about two years.

They were shopping when the market was hot, their house in Illinois was already sold and they had two days left in the trip to find something.

"That's why we came out this far," she said.

Now, they want to move to Chandler because of the schools and the commute to the airport for Marsh's traveling husband. But they're competing with their neighbors to sell.

"On my block alone, there's got to be six houses up for sale," Marsh said.

 

Sales director set to compete

Lorie Keller prepared her staff at Florence's Anthem at Merrill Ranch two weeks ago for life on a competitive sales floor. The 3,200-acre community was about to open for public sales, and Keller is director of sales for the Parkside edition of homes.

Merrill Ranch began selling homes strictly from an Internet interest list on April 15. From the list of about 10,000 interested people, Keller said, 210 purchased homes.

"For all of April and May, it was really high demand," she said.

But she said sales have calmed down a bit in recent weeks. She said her sales staff is beginning to see the market shift as prospective buyers come in with less equity than they had hoped from the houses they are moving from.

Still, she said she is not concerned about interest in Merrill Ranch. They just need to smooth out the logistics of getting people into a house that is right for them and their budget, she said.

"We feel it. I can't say we don't," she said. "I'm not worried people don't want to be here. I know they do."

 

Investor takes long-term view

Cool down. Warm up.

It doesn't matter much to investor Dana Byron, as long as any downturn doesn't become so frigid that he can't find occupants for his seven rental homes, including five he bought in May in Maricopa, Queen Creek and the Santan area.

The Rochester, N.Y. native has done well enough, since he bought his first home in 2001 in Peoria, to leave a grocery warehouse administrative job and focus on real estate.

"For me, the thought of punching a clock for 40 hours a week until I'm 65 is annoying," Byron said.

He recommends sound money management to cover an unexpected crisis like sudden repairs, finding quality tenants, and not fretting over the little things like collecting rent that is lower than monthly mortgage payments. "You can't be upset you lost $200 on a rental when you made $10,000 in equity," he said.

He said many investors and homeowners have become used to big gains and are panicking over the market unnecessarily as it tries to find normalcy. Byron said renters help build his equity and ability to hold on to properties longer so he can sell when prices are more favorable.

 

Maricopa residents face stiff competition

When Titus and Angel Metzger paid $135,000 for their 1,480-square-foot Maricopa home in July 2004, they never envisioned 2005's run-up in prices.

When they refinanced their house into a $174,000 loan, they couldn't have imagined 2006's market cooling.

Now, they're in a pinch.

They've been trying since January to sell their corner-lot home in time to buy a bigger new home in Maricopa.

"Have we had luck trying to sell? It's not even 'no.' It's a big, 'Hell no,' " Angel said. "I'm ready to put on a clown suit and stand on the corner and do cartwheels."

They are facing stiff competition from other sellers, including three on the other corners, and builders offering incentives and price cuts.

They have gradually whittled their original asking price of $269,000 down to $229,000.

Open houses have attracted fewer than a dozen lookers.

Ironically, builder D.R. Horton has slashed the price of the new 2,200-square-foot home they want from about $300,000 to $215,000, cheaper than the smaller, older home they're trying to sell, and offered a $10,000 down payment if they finance through the builder's preferred lender.

"They wouldn't drop the price $80,000 if they weren't desperate," Angel said. "That tells me something."

They hope to sell within the next few weeks to avoid losing their $5,000 deposit on the new home.