Until now, Phoenix area home sellers where those most severely impacted by the sharp drop in Arizona real estate prices and disappearance of home buyers.
A new victim is emerging; .....Buyers of new home construction. 
There are an increasing number of builders who are suffering from this Real Estate recession. As a result, they are having problems with financing and many new home builders in Arizona are filing for bankruptcy protection.
In fact, nationally, there are a record number of builders going broke and looking to the U.S. bankruptcy court for protection from creditors.
The larger builders are suffering less than the small local builders who were caught in the Phoenix, Scottsdale downturn and national mortgage crisis and have less access to capital to weather the storm.
Let me be clear. The vast majority of builders in the Greater Phoenix area are stable and have the assets and resources to remain.
However, there are also a growing number who are struggling to meet financial demands. As a result, they are having difficulty continuing operations.
What does this mean to buyers?
The new victim is the buyer of new construction from these failing builders. Buyers bough lots, picked floor plans and are in the middle stages of the building process of their home. Now, there are increasing instances of builders not being able to finish the homes.
The buyers of new construction are in a unfortunate situation. They have put down a minimum of 10% of the home value. They have prepared to move into their home at a predetermined date. Now the builder is insolvent and filing for Bankruptcy. They do not have the financial capability to complete construction.
This is such a growing concern that Sam Wercinski, Arizona's Real Estate Commissioner, issued a Consumer Alert to buyers of homes form Arizona home-builders.
"Homebuyers and their real estate agents have the right to know if a builder is in financial trouble and what the status of their earnest money or home completion is. The Department of Real Estate can help provide this information and give assistance to consumers in need,"
The Arizona Department of Real Estate is now posting information on builders who are in bankruptcy or are having financial difficulties so consumers can make informed decisions and take steps to protect themselves.
A list of known builders is available on the Department's website: www.azre.gov Consumers should also reference the Commissioner's Advisory No. 2 on the website's home page which provides guidance for homebuyers, real estate agents and others impacted by a builder ceasing operations.
You can also contact the National Association of Homebuilders (NAHB) or the Arizona Association of Homebuilders for information on local builders financial health.
If you have been considering buying a home from a new home builder, make sure you check the list before making a decision.
If you are in the middle of the home building process, ask your Realtor for an update and information on its ability to continue and complete construction.
james , good idea to post this info.
There are many builders who are going bankrupt and do not have the financial ability to finish homes that buyers have been waiting for and have the deposit fro as well
creative market solutions - we have lot of new home construction here in greater phoenix over the last 5 + years,
many builders where start up and not well funded, and overleveraged, as a result they are caught in the middle of construction and do not have the money to move forward.
Hopefully, the money depost on the home is safe in an escrow company
just a warning to real estate agents . Do not make any statement about the financial health of builders , whether you know it or not,
there are several instances of builders suing for slander,
just point the client to the web site and let them make there own decision
James, As always, you provide an excellent source of information in your blog. Thank you. I have a friend who is thinking about a new home in Las Vegas. I need to see if NV provides a similar list as AZ. Thanks for the great info and the reminder that I need to talk with my friend about the possible implications of purchasing a new build. Oh, and of course, I need to provide this link to my buyers.
James Ladarski, Thanks for the excellent reminder about possible slander situations.
Bob - appreciate the complement very much.
I want buyers to understand that they are not the only one's struggling.
And more then ever, we need to , as agent, protect consumers best interests. Which is earnest money and other deposits in case of a worst-case scenario
James Ladarski - great reminder about possible slander. Excellent Point!!
Do not make any comments negative about any home seller or builder. You do not know the accuracy of any information.
Just point buyers to the site and let them do their own research
If you are buying a spec build in the builder inventory , then you probably are ok.
If you are considering buying a lot and then building, you better check the financial stability of the builder.
Barbara - good point. If you are buying a completed home then you have less to worry about.
Though, if the builder goes under, and the land does not get developed or foreclosure rise, it could bring your property value down as well.
either way, it is good info to know.
James - Good information. We have a couple of builders here who have bit the dust. One was a very well known local builder who I never would have thought it could happen to. These were all spec builders and their homes are now showing up in the foreclosure segment. Like you mentioned, this can hurt the development as a whole due to empty, overgrown lots and many vacant, foreclosed homes.
Pam - this is just another tool that agents need to have to help their client, advise them and protect them in a market that has some land mines to avoid.
The HOA planned communites are also at risk due to the nature of one or a few builders developing entire areas / communities
I work with many builders. Many are facing challenges with construction loans coming due that they are having a difficult time re-financing.
Bank are working with them as lenders do not want to take real estate, no less undeveloped land.
Always good to check this site though
Prime Time Lending (Nick Raush) -
didnt really think about the fact that builders were also trying to refinance loans. They must be trying all sorts of loan modifcation.
I could not imagine banks wanting to take entire communities back into REO inventory
james,
make sure you build in a community that is mostly completed if the builder financial situation is suspect. If the builder is in good shape (based upon this site) then build away. Just make sure you buy your home priced accordingly
Jason Mitchell - most builders, have the financial resources to finish your home if your in mid-construction. There are some concerns about house values if there are many homes that dont get finished and are forced into foreclosure.
Just dont make any statements good, bad or indifferent. just point them to
A list of known builders is available on the Department's website: www.azre.gov
Consumers should also reference the Commissioner's Advisory No. 2 on the website's home page which provides guidance for homebuyers.