New home builders are showing “signs of life” in Arizona, especially in the East Valley, one economic expert says.
But it still may be a while before the state returns to “normal levels.”
“Home building, similar to job growth, may be up somewhat, but continues to be far below ‘normal,’ and therefore, the best observation we can make is that home construction is showing signs of life,” research professor Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business at Arizona State University, said. “(It) maybe up as much as 50 percent this year, but even at that, it will be still one of the weakest years on record for Arizona.”
Still, with plans taking shape, the East Valley may be the beneficiary of a lot of new homes.
Gilbert has issued 1,896 new home permits through August, already surpassing the 1,545 new home permits for all of 2011. There were 197 permits issued in August, while April and May were strongest with 290 and 295 permits issued.
In the peak years, the town saw 300 permits a month on average.
It’s possible the town could come close to issuing double the number of permits of 2011, said Greg Tilque, director of the town’s development services department.
And the future may be brighter.
Six home builders just completed the purchase of land in southeast Gilbert to develop Bridges at Gilbert, with plans to build about 570 homes at Queen Creek and Higley roads, said Gina Canzonetta, marketing manager for Maracay Homes. Construction on that will begin next summer.
In fact, of the 10 new communities Maracay is working on, eight are in the East Valley, she said.
Shea Homes has started sales on two new developments — more than 200 homes — in San Tan Valley, the home builder announced last month.
And Mesa’s Eastmark will have 700 new homes in its first residential phase. Sales will start early next year. According to an Eastmark website, 15,000 residential units are planned for the 3,200-acre development.
Maracay’s Canzonetta said Arizona home builders are on track for 14,000 new home permits this year, double the average of the last two years, but still below the “normal” levels of 20,000 to 25,000 a year.
In his latest housing report, Michael J. Orr, director for the Center for Real Estate Theory and Practice at ASU’s W.P. Carey School of Business, said home buyers are seeking out new builds because the inventory is shrinking in the resale market and there’s a lot of competition from investors.
Orr found that from June 2011 to June 2012, new single-family home sales increased by 39 percent in Maricopa County, with Gilbert leading the way.
“As ordinary owner occupiers get increasingly frustrated with the difficulty of competing against investors with cash offers, some have turned to new homes as their source,” he wrote in his report.
Maracay’s Canzonetta said home builders are seeing the change.
“We’re in the middle of recovery. We’re starting to improve,” she said.
Gilbert’s Tilque said the town is about 10 to 13 years from build-out, with another 30,000 homes likely to be constructed in Gilbert during that time before land runs out.
Chandler leaders have already indicated the city is close to being out of space for new developments.
So don’t expect see the large number of new home permits of the boom years, Orr signals in his report.
“We must remember that these permit numbers are still very low compared with what we typically saw for any June prior to 2008. Even with these permit levels, new single family homes will remain a relatively small part of the market compared with 2007 and earlier,” he wrote.
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