Mesa new housing market hits highest mark in 5 years - East Valley Tribune: Real Estate

Mesa new housing market hits highest mark in 5 years

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Posted: Sunday, July 21, 2013 5:12 am | Updated: 3:50 pm, Tue Aug 20, 2013.

Mesa’s new housing activity more than doubled in the last three fiscal years.

During fiscal year 2011 – which began July 1, 2010, and ran until June, 30, 2011 – the city issued 414 new home permits. During the most recent fiscal year, which ended June 30, the city issued 982 permits.

In June alone, 146 permits were issued. That’s more than any single month in the last five fiscal years. Mesa beat out the national trend where new home construction dropped unexpectedly in June.

And the city expects that to keep going upward.

“What I’ve been impressed with is the number of these projects that were stalled, a lot of them since 2008, a lot have been picked up by organizations and they’re pushing forward to get them working again. That’s a great sign,” said Mesa’s Steve Hether, deputy director of the city’s development and sustainability department.

Hether pointed to the KB Homes’ Main Street Casita development, along with the Villages at Country Club and the Villages at San Tan.

“One thing that helps is a lot of them were overgrown with weeds. Now they’re getting them picked up and moving forward. I’m getting a lot more calls from groups interested in projects,” he said.

Home builder Blandford Homes is busy at Mountain Bridge while Taylor Morrison and William Lyon are busy Lehi Crossing, all in northeast Mesa. Farnsworth Homes continues to pull permits at Sunland Springs Village south of U.S. 60 in east Mesa, Hether said.

Sales and construction have just gotten started on the resident piece of Eastmark, a 3,200-acre DMB development planned in east Mesa. There, thousands of homes will be built over the next two decades.

“With DMB and those builders down there, I think we’re just beginning to see what I would expect to be a huge amount of activity out of there. They just got their models complete and the subdivision improvement plan has been accepted by us. So we’re just getting started with sales out there. We’re beginning to see more and more out there. Just based on anecdotal information I’ve received, several of the builders have exceeded their expectations out there,” Hether said.

Hether said the city’s planning department is hearing about even more subdivisions coming into the community.

“We’re trying to find more temporary employees for the planning department because the work is starting to come up,” Hether said. “The planning starts to hit us about a year later.”

It’s a welcome difference from two years ago, he said.

“Just based on the permits and activity, it hasn’t started ramping up heavily, but just from the questions you’re getting asked — two years ago it was dead silent — now, you have a lot of people interested in various pieces of property. It seems to be building. I’m very hopeful,” he said.

Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business at Arizona State University, said it’s a good sign for the housing market that developers are picking up projects.

“You can see the builders are feeling quite comfortable with the amount of money they’re putting out here. I don’t think they’re finding as many owners, but that’s because the lending restrictions are still quite tight. A lot would like to buy homes, but can’t get approved for a mortgage,” Orr said earlier this month. “Probably what would help is if the lenders would loosen up a little bit. As interest rates go up, that helps give them an incentive to not be quite so stingy to people they would lend to.”

There are some signs that that is happening, Orr said.

The Valley’s housing shortage may contribute to the growing number of new home permits as buyers turn to that market when they can’t find a resale home, Orr said. Though some have speculated investors will dump homes purchased as rentals during the housing crash, Orr said he doesn’t expect that to happen.

“I think that’s a wild, outside chance. They’re occupied and I don’t think they’re going to suddenly dump them,” he said. “The rumor of banks holding onto homes is a rumor.”

Orr expects home builders to be more cautious, too, after what happened with overbuilding prior to the recession. New home sales in May made up 9 percent of home sales in the Valley, according to Orr’s most recent report. In a typical market, new home sales make up 25 percent to 30 percent of all sales.

“The only way to get more supply is more construction and there’s no way that can ramp up very fast. We’re going to see a long-term period of short supply,” he said.

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