Sunday, September 19, 2010

New subdivisions starting to sprout

Phoenix-area residents are about to encounter something they haven't seen since the housing boom: grand-opening signs for new communities.

The first of those is at Adora Trails, a 1,900-lot, master-planned community by Taylor Morrison on Riggs Road, between Val Vista and Higley roads, in Gilbert, which opens for business Saturday.

Another subdivision scheduled to open soon is Church Farms, a William Lyon master-planned community of roughly 1,750 lots between Meridian and Signal Butte roads in Queen Creek.

At least three others are scheduled to open before the end of the year, a Phoenix area housing analyst said.

The price of vacant lots inside existing subdivisions in desirable areas such as the southeast Valley has doubled since 18 months ago, according to homebuilding-industry analyst Jim Belfiore, president of Belfiore Real Estate Consulting in Phoenix.

That price increase almost nullifies what had been a significant financial advantage for homebuilders to build inside existing subdivisions abandoned by former competitors, Belfiore said.

A finished lot is one in which a significant amount of work has been completed, such as grading, road and curb construction, and the installation of sewer pipes and other utilities.

Rather than developing raw land, as they usually do, homebuilders during the past 18 months have opted to buy finished lots when they have wanted to add a new location.

But the supply of lots either purchased or spoken for by existing homebuilders is nearly depleted, and what remains is now selling at a premium.

Lot prices generally are determined based on the property's width, or "front-footage," Belfiore said. The price per front-foot has gone from as low as $400 to $600 to $1,250, which he said was about what it costs to develop raw land.

It remains unclear whether new subdivisions, conceived while home sales were being supported by federal tax incentives, will be successful.

Still, Belfiore said the new communities have as good a chance as any to thrive.

"Now, it is more viable to purchase raw land and bring it to market," he said.

by J. Craig Anderson The Arizona Republic Sept. 17, 2010 02:36 PM

New subdivisions starting to sprout

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