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Pinal Partnership -- Good news: Housing prices on the rise
Wednesday, August 8, 2012
It’s official! Home prices are starting to rise, houses are selling at a rapid pace, and the housing market is recovering.
At the July 13, 2012 Pinal Partnership meeting, held at the Gila River Indian Community Shelde Building, four real estate authorities were outspoken in their positive comments about the state of the Phoenix area’s important real estate market. Their remarks included Maricopa.
Pulte’s Mike Brilz, vice president of land for Pulte’s Arizona Division, declared, “We have turned a corner… (we’re) going in the right direction” and housing is “back to 2009 levels.”
Equally happy with the state of the home market, Lennar’s Homebuilding Division President for Phoenix and Tucson Alan Jones described a year that started the same, but in “February…sales doubled,” and in “March sales doubled,” which was “unanticipated.” They have increased prices and people are buying.
Jim Belfiore, president of the residential market research firm Belfiore Real Estate Consulting, proclaimed, “Demand has come back strongly, resales are down.” He is “very optimistic about the future.” Chandler and Gilbert show price increases of 6.7% for new homes. In three subdivisions, there were “four times as many homes sold as six months ago.” “(City of) Maricopa is coming back strongly” and “one (subdivision) is sold out!”
Trends and prophecies
Jones talked about price disparities where those searching for a home are again willing to drive a distance to purchase a better home. People are traveling to Pinal County to take advantage of this.
There is also a perception with the rise in pricing that “You’d better buy now,” commented Brilz. Pulte is finding more model home visits are being converted to sales with sales per store doubling over 2010. While things are “a little slower” for Pulte in Pinal County, they “weren’t ready for larger business…but the amenities and lifestyle (available)” in Pinal County are drawing a great deal of interest.
Belfiore stated, “Bad assets are gone; demand is pushing up. (There will be) tremendous growth in the next 36 months.” He sees the strongest increases in the “submarkets” (such as Maricopa), “where the most distressed supply was.”
Another positive trend mentioned by Belfiore is that owner occupants are increasing, giving investors fewer properties to “fight” for. With owner occupants, a neighborhood is considered more viable, commanding better value in pricing.
Resale retailers are short on supply, according to Jones, with only a two-month’s supply. The result is that new home sales will continue to rise with more demand competing for the available homes. Jones remarked, “Resalers brought customers to Lennar – when (we) raised prices!”
What can communities do to be more business friendly?
Jordan Rose, president and founder of Rose Law Firm, acting as moderator, posed the question, “What can we do to be more business friendly?”
Answers varied from “charge less for impact fees” to “this state is doing everything to drive business, support housing growth.” Glendale was given as an example of a city that reduced impact fees to attract builders.
Another concern is water infrastructure. According to Brilz, “There is less water infrastructure in the East Valley.” He sees the “collaboration in Pinal County as really strong… but Pinal County is not quite there yet.” Brilz also stated, “Pinal County… has open doors… a better attitude.” He is “happy to be working in Pinal County for the first time in my career.”
Jones highlighted Lennar’s promotional efforts, which they accomplished by building a model home in the parking lot of the IKEA store in Tempe. At first, Tempe was not receptive to the model home. When Lennar showed how three other municipalities had approved this approach, Tempe approved it quickly. The house was built in record time and 14,000 people viewed the model in five months. Lennar is also adapting to the “boomerang” effect of grown children moving home or Baby Boomers needing a place to live with elderly parents. To meet this need, Lennar has created a “home within a home” that provides a private, multi-generational home with only about $120 per month additional cost for the extra space. The approach has been very successful.
Pulte’s Brilz said, “Don’t be afraid to push the envelope and start over,” creating new approaches to appeal to buyers and to meet needs. He spoke of how Pulte built bigger homes to attract buyers where the smaller homes they planned were not selling.
Ted Wall, who was the least talkative of the four panelists, commented privately that he launched his own appraisal firm, Insight Valuation Group, so he did not feel he could comment yet. However, when asked about the City of Maricopa, he said, “I think Maricopa is wonderful, is planning good new stores, and the quality of life is higher.”
Be prepared to see housing prices rise after years of depressed valuations!
Positive news at last – and, hopefully, Arizona has learned its lesson and will diversify its economic engines beyond the home building industry so the economy is not so vulnerable.
Note: The Pinal Partnership is a group of business and government officials who meet regularly to address concerns and act as advocates for issues they consider important to Pinal County.
Shelley Gillespie / CopaNews.com
Jim Belfiore (left) delivered news that had Pulte's Mike Brilz and Lennar's Alan Jones smiling.