By: Michelle Reese – East Valley Tribune
For seven years, Chandler resident Sharon Constant watched new home developments pop up, looking for a new place to live.
Constant spent 10 years working as a new home salesperson before the bubble burst. With that experience, she knew what she wanted – a new single-level home, with an additional bathroom and a view.
Last week, Constant plunged into the new housing market in the East Valley again, this time as a buyer.
She and her fiancée, Van Johnson, camped out to get their first-choice lot when Fulton Homes opened Monterey at Fulton Ranch. In just one month, 33 percent of the development’s 89 lots have been bought.
For Constant, “It was not only location, it was the lot and the plan.”
There appear to be positive signs in the new housing market in the East Valley. Builders are buying land or announcing developments. More people are trekking out to see builders’ models.
Stalled projects are on the upswing. At Gilbert’s Morrison Ranch, construction vehicles are moving again, with Blandford Homes and Richmond America entering the mix as other builders finish their phases.
Even with a glut of foreclosures or short sales on the market – and housing price values experiencing a double-digit drop in the Valley – builders are banking on the products they offer and the appeal of the East Valley to charge some life into the business.
Dennis Webb, vice presidents of operations for Fulton Homes, said there are “pockets” of growth in the housing business, with the East Valley faring “way better than the rest of the world.”
“People want to live here. It’s as simple as that. People don’t have to go to far away places like they used to. People can live in Gilbert and Chandler for not a whole lot of money,” he said.
Fulton Homes is working on three large developments in the East Valley, Webb said. But the company has also changed the product in the last year-and-a-half, offering a more affordable home.
There’s still a “giant gap” between the price of new homes and resale homes, he said, adding, “We’re trying to tout the advantages of a new home versus a used home.”
Like Fulton, Taylor Morrison is continuing its growth in the East Valley. The company is building Adora Trails, a 1,870-lot community in south Gilbert.
“Permit activity has been higher in the south East Valley than just about any place else in the Valley,” said Taylor Morrison division president Charlie Enochs. “I think a lot of builders, including us, have reacted to that.”
But there’s still the foreclosure market to contend with, he said.
“The interesting thing is it continues to be a day-to-day battle for us. I would be lying to you to say foreclosures are going way. We’re starting to see notices level off.”
Taylor Morrison is opening a presale office for its next East Valley project – Trovita in northeast Mesa – this spring. And Fulton Homes has three pieces of East Valley property in escrow.
In 2009 and 2010, Gilbert issued more than 1,000 single family building permits – 1,278 and 1,062 respectively, according to data from the Homebuilders Association of Central Arizona.
“We’re pleasantly surprised with the number of single-family home permits we’ve been issuing for the past two years,” said Kyle Mieras, planning and development services manager for the town.
During the housing boom, Gilbert issued hundreds of housing permits per month, Mieras says. The slowdown started in 2007.
Chandler follows Gilbert in the East Valley, with 552 housing permits in 2009 and 518 in 2010. Because the city is approaching build-out, with few large tracts of land to develop, Chandler was already preparing for a slowdown when the market crashed, said Dave Nakagawara, a building official with the city’s transportation and development department.
“We are not going to be expecting huge numbers from here on out. We are going to continue to see 30 to 50 a month,” he said. The city will enter “a new chapter” of development, he said, with more redevelopment and renewal.
A federal tax credit for home buyers jump-started some housing permits in 2009, Nakagawara said.
“I think 2010 would be what I would call a normal year for the city of Chandler in its current stage of growth,” he said.
Gilbert has 63 new housing permits for 2011 as of earlier this month, but Mieras expects most are owner-initiated homes, not speculative, Mieras said. That’s a big difference from the boom years.
Jay Butler, associate professor of real estate at ASU’s W. P. Carey School of Business, said homebuilders are using aggressive tactics to show a new home is more desired than a foreclosure.
“The homebuilders are trying to find a niche to survive in for a while. Gilbert and Chandler are popular areas. The foreclosures are probably more competitive here than elsewhere. They’re newer homes (the foreclosures). They’re the traditional family homes and they’re really marked down from the original price,” he said. “Every builder is trying to figure out what’s going to work. Every time we’ve had a down market this happens.”
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