Housing analyst RL Brown regularly flies the East Valley to determine how much inventory builders have. A couple of months ago, his bird’s-eye view of framed houses and cement slabs clearly showed activity along Hunt Highway had slowed.
“The theory is if I see 10 houses being framed and I only see two slabs out in front, then I know that subdivision has an inventory problem,” he said.
“In other words, they’re not starting anything. In almost every subdivision you’d look down on, you would see seven houses being framed and two slabs ahead, and 10 houses being framed and three slabs ahead, which means the guy is basically on the way to shutting down his production operation.”
Traffic congestion in northern Pinal County has hurt sales at developments like the 2,000-acre Johnson Ranch. Homebuilders have had to offer tens of thousands of dollars in incentives to get rid of oversupply.
“It’s universally held the East Valley in general has been the hardest hit in the current disruption in the marketplace, and it’s also well known the Johnson Ranch area has been the hardest hit, not Johnson Ranch specifically, but the Hunt Highway area,” Brown said.
Last year Johnson Ranch developer Sunbelt Holdings said it exceeded its projections for sales when it sold 1,290 homes. But January and February brought sluggish sales.
“We think it’s the general slowdown in the housing market, but there are also traffic issues,” said Stephanie Wilbanks, Sunbelt spokeswoman.
The area is showing signs of picking up. Brown noticed it on Memorial Day.
“I saw a dramatic change,” he said. “I saw lots of slabs coming out of the ground, trenching for slabs and it was obvious that the builders’ efforts at getting rid of their inventory were having some impact.”
There were 1,110 homes resold in the Pinal county during the first quarter, down from 1,340 in the fourth quarter of 2005, according to the Arizona Real Estate Center at Arizona State University Polytechnic. There were 1,435 sales during the first quarter of 2005, the hottest year on record.
Communities such as Johnson Ranch are popular for people seeking affordable housing that is increasingly difficult to find in Maricopa County. Although the county has a limited job base (46,375 jobs in April) and commercial real estate sector, people were willing to drive increasingly longer distances to find affordable housing, the center said.
But congestion on the roads is a major drawback.
“There’s very limited entrances and exits out of either Johnson or Power Ranch,’’ said Jay Butler, center director. “They’re really congested and it can take an inordinate amount of time just to cover the last mile or two miles.”
Besides traffic snarls, builders at Johnson Ranch also have to deal with $3 a gallon gasoline, a price that has some looking for urban housing.
“Even though all these condominium projects don’t make a lot of sense, there is a movement across this country back to some urbanized areas and, in a sense, closer to jobs,” Butler said. “They’re not young families. They may be young people or the empty nesters. There’s some movement but just how big it is nobody really knows.”
Wade Denman of Denman Realty Group in Mesa said he’s heard of people moving out of the Hunt Highway corridor toward Coolidge so they can access Interstate 10 to commute to the Valley. “If you’ve driven out Ellsworth Road to get out to the Hunt Highway, it is just a nightmare,” Denman said, adding construction has torn up the road by the General Motors Proving Ground in Mesa for some time.
A second alterative to the the Johnson Ranch area is Ironwood Drive (Gantzel Road in the south), but that road isn’t a straight enough shot to make it a good reliever, he said. “Although, right there in the Queen Creek area they’ve done some really nice things with Ironwood,” Denman said.
“They’ve made it four lanes. The homebuilders have been forced of course to go in and make those some nicer roads, but they’re only good until they get past their subdivision. You’re really good for a while there but then you go right back down into a bottleneck.”
Wilbanks said traffic has been helped recently by the opening of Loop 202 and street improvements done by the county and Queen Creek. Some temporary traffic signals were added at four-way stops, she said.
“We think that’s a lot of the reason why sales and traffic have increased,” Wilbanks said.
A spokeswoman for Pulte Homes, which owns the Solera by Del Webb community in Johnson Ranch, said her company and other developers, builders and civic leaders are members of the Pinal Partnership, which advocates a highway corridor that would provide relief to the area.
The Arizona Department of Transportation has proposed a corridor east of Hunt Highway through Coolidge and Florence before connecting with state Highway 87.
“We believe it would be a great asset to the area, an asset in terms of developing economic viability as well as relief for the citizens in the area,” said Jacque Petroulakis.
Brown said the deep discounts by builders appear to be moving inventory.
“The building community is in the process of realizing they need to reidentify their potential consumer for that area and they need to address his needs,” he said. “That may be repositioning product into lower price brackets.”