At the peak of the housing market, bulldozers scraped swaths of the desert surrounding Tucson in anticipation of future growth.
Then job losses and dwindling paychecks forced people out of homes rather than into them. The housing market tanked, and developers left behind bladed tracts or partially built subdivisions.
But the dirt is flying again in some locations, and new houses are starting to pop up. The Dan Adler Team has the list and easy to use map to navigate these homes. Better yet, Associate Broker/Owner Dan Adler will shuttle you around to these different locations to view the homes and ensure you get the best possible deal. “When home buyers visit a subdivision without a real estate professional they hurt themselves financially” Adler said. “When a home buyer goes to a subdivision with a real estate professional from my team, they get the benefit of not only a powerful negotiator, but also the benefit of our team having sold many of the homes already existing in these subdivisions. Therefore, we already know how good a deal our clients should get and we expect to get as good or better deal this time” he exclaimed.
In Corona de Tucson, about 20 miles southeast of Tucson, KB Homes is building homes in the Sycamore Vista development near South Houghton and East Sahuarita roads.
On the northwest side, national builders Lennar and D.R. Horton are putting up homes in Willow Ridge, on West Cortaro Farms Road east of Interstate 10. Meritage Homes has kick-started construction of homes in Sky Ranch, near West Tangerine Road.
“We have seen an uptick in activity recently, which we see as a very positive sign,” said David Godlewski, a spokesman for the Southern Arizona Home Builders Association.
Land prices drop
In 2005, at the peak of the local housing market, builders pulled 12,475 residential permits for Pima County. By 2009 the number had plummeted to 2,077.
Investors swept in, buying lots at bargain prices- often with plans to hold onto them until land values resurged.
That hasn’t happened; land prices are the lowest they’ve been in five years, said Will White of the Land Advisors Organization, a consulting company that brokers land deals for home builders and commercial clients.
And deals like that are too good for home builders to resist.
Industry experts still predict a sluggish recovery as builders move cautiously back into the market. But they are coming back – at least at some locations.
“As the confidence built back up, the home builders entering was a real shot to the market,” White said.
Deals on troubled properties – those that had slid into default – are closing now, eliminating them from the market, White said. He brokered a $5.8 million deal at the end of 2009; D.R. Horton purchased the remaining assets of Canoa Homes, which had shut down its operations. The national builder bought 203 lots – all but 72 of them finished and ready for building – in areas surrounding Tucson.
gradual recovery
White, who predicts about 2,700 residential permits will be issued in 2010, stressed that any recovery would be gradual. When Tucson’s economy was healthy, he said, Pima County was issuing about 6,000 residential permits each year.
That means home building this year will be less than half of what it was as much as eight years ago.
Local housing consultant John L. Strobeck, who tracks residential permits, said January 2010 saw 201 new-home permits, nearly twice the number pulled in January 2009. Builder Richmond American pulled the most permits with 43, Strobeck’s report released in February said, followed by KB Home at 34 and D.R. Horton at 33.
Strobeck’s full report for February hasn’t been released, but he said the number of residential permits pulled was again more than 200.
While down from years past, “it’s starting off quite healthy,” Strobeck said.
Again, Richmond American and D.R. Horton pulled the most permits, Strobeck said, with most of those for homes at the Tucson area’s southern reaches, along Valencia Road and in Rancho Sahuarita.
Tax credits expiring
Some recent construction might be linked to home builders hoping to attract buyers wanting to take advantage of federal tax credits that expire April 30, said Godlewski of the home builders association.
First-time home buyers are eligible for an $8,000 credit. Repeat home buyers can get up to $6,500.
But when it comes to going from dirt to homes, financing remains a challenge, Godlewski said. While construction has begun at a number of places that languished during the recession, there hasn’t been a significant increase in construction jobs.
While Godlewski had some optimism about the recent uptick, he was cautious about calling it a turnaround.
“When you get into the hot months of summer,” Godlewski said, “you see activity slow down.”
Home builders are also having to compete with a resale market that’s been depressed by increasing foreclosures.
“New-home sales have got extremely competitive because the resale market has deteriorated so much,” said Jeff Grobstein, the division president of Meritage Home’s Tucson division.
Home builders are offering energy-efficient homes, new floor plans and emphasizing that new homes are cheaper than they used to be.
“Prices have come down over the last year, 15 to 30 percent,” Grobstein said. Meritage Homes recently purchased lots at Sky Ranch and has started opening models there, Grobstein said. The builder was able to take advantage of dropping land values and buy the property after previous developments had fallen through, Grobstein said.
In Rancho Sahuarita, the master-planned community south of Tucson, new homes were selling at a rate of about one a day last year, said developer Bob Sharpe. That’s down from a peak of 800 new homes sold in one year, Sharpe said.
But there are signs of optimism, Sharpe said. Existing-home sales were up about 30 percent from 2008 to 2009, though prices had dropped about 10 percent.
To spur new-home sales, Mark Rodocker, KB Homes executive vice president for Arizona, said his company surveyed customers to develop new floor plans. Rodocker said his company purchased lots at the Sycamore Vista development in October, started construction and now has models open.