Valley homebuilders used December 2012 to take steps for future projects, while also seeing a 30 percent increase in new home sales for all of 2012, compared to 2011, according to a recent report.
According to Michael Orr of the Center for Real Estate Theory and Practice at Arizona State University’s W. P. Carey School of Business at, builders are preparing for the future.
“Builders are positioning themselves to have the option to start ramping up. It’s not necessarily the case that they will start building on them right away, but they want to bein the position to if demand starts to increase,” Orr told the Tribune. “Builders don’t mind having a lot of land in ownership if they think it’s appreciating. What they don’t want is to have a lot of land if it’s going down in price, which is what we had in 2007.”
In fact, from 2007 to the early part of 2012, there were many years where investors led the way with land purchases in the Valley. That started to change in May, according to Orr’s report.
“A lot divested of land (during the recession), now they’re ramping up. But it only means they’ll build more homes if they see a need,” he said.
The East Valley was most active in terms of land purchases. An analysis of the sales of finished and partially improved lots found that home buyers are going to continue growing Gilbert, with Mesa not far behind.
There were 359 lots purchased in Gilbert in December. Most of those were purchased by Ashton Woods and Pulte in the Bridges at Gilbert development south of the 202.
All of the lot purchases — 342 — in Mesa were at Desert Place at Morrison Ranch. Lennar, Ashton Woods and Pulte were the buyers for the lots at Guadalupe and Sossaman roads.
There were also 79 lots also purchased in Queen Creek, 142 in San Tan Valley and 53 in Chandler.
During 2012, homebuilders were caught by surprise in the spring when buyers started to make purchases, Orr said. There was a 30 percent jump in housing permits in 2012 compared to 2011, though December was low compared to years past.
“Spring is always the busiest season for them. If they hadn’t bought a lot of vacant lots, they would be in danger of running out. We have relatively few subdivisions that are active, compared to a typical situation. Only about half,” he said.
Gilbert led the Valley in the number of single family building permits issued in 2012, according to a report released by Gilbert – using numbers it acquired from the Home Builders Association of Central Arizona. The town issued 2,418 permits last year, a 57 percent jump over 2011. Queen Creek saw the biggest percentage increase with 312 percent more housing permits issued — from 116 in 2011 to 478 in 2012.
What does this all mean for a homebuyer?
Orr said right now, buyers are still going to find relatively low supply of homes available, which was true for most of 2012.
“There are not as many homes available as people think and there’s not going to be a change. There’s a theory the banks are holding on to homes. That has not merit. That’s a scare tactic that’s become an urban myth,” he said. “Prices will continue to go up from where they are not, even though they’ve gone up significantly in the last 12 to 15 months. I don’t see that stopping. Some people would say there is a new bubble starting, but I would say there is no evidence of that. None of the traits are a bubble.”
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