“It was the best of times, it was the worst of times.”  The introductory line to Charles Dickens’ A Tale of Two Cities is one of the most recognized phrases in literature.  It is also an appropriate description of the last business cycle and undoubtedly a great theme to tie into the Phoenix housing market.  There is only one problem here … I’ve never read A Tale of Two Cities so I am at a loss to elaborate much more beyond that famous first line.  While most of my friends read that story for school, my English teacher had us read another Dickens classic: Great Expectations. Read the rest of this entry »

(Phoenix, AZ – April 30, 2013) The Phoenix new-home market went from 6,630 starts in 2011 to 11,102 starts last year, a 67 percent increase.  Many in the industry have high expectations for continued improvement this year as well.  According to Metrostudy’s lot-by-lot survey of new-home subdivisions, there were 2,463 field-verified starts in the first quarter of 2013.  This is up 28% from 1Q12 when the industry started 1,920 units.  “It is early in the year, but Phoenix is starting 2013 in line with Metrostudy’s expectations,” said Ben Sage, Director of Metrostudy’s Arizona region.  “For those expecting starts to increase at a similar pace as last year, these early returns may be a bit disappointing.”

New-home construction has been particilarly strong in the Southeast Valley, which accounted for 37% of all starts over the past year.  This is beginning to trend down, however, due to rising prices and a shortage of vacant developed lots.  “The Southeast Valley, particularly Gilbert, has carried the banner for homebuilders over the last two years,” according to Sage, “But its market share is expected to decline in the near term – not due to a lack of demand – but a lack of supply.”  The Central Market Area saw the largest increase in starts from 1Q12 to 1Q13, rising 95% from 173 units last year to 338 this year.  D.R. Horton has been particularly active in Vinsanto and Hurley Ranch, both on the near west side of town.

Every quarter, Metrostudy tracks the inventory of new homes that are finished but vacant.  These units may or may not be under contract, but this indicator is a key diagnostic measuring the health of the new-home market.  Finished vacant inventory increased in the first quarter by 172 units or plus 9%.  The total number of finished vacant units is now 2,003, which represents 2.2 months of supply.  This is close to equilibrium range, so the increase is not a major concern.  It indicates, though, that builder sentiment was strong enough that many tried to get ahead of demand by building some specs early in the year.  Sage said that “Builders should not have any trouble getting these units sold.”

The number of vacant developed lots, or finished lots, in the Phoenix area numbers 53,838.  This is for all product types, including attached product as well as custom lots.  The most active builders want lots that aren’t too small or too big, and there are only 37,195 vacant developed lots in that big-builder size range.  These would last 48 months, which is above equilibrium, but half of Metrostudy’s Phoenix-area submarkets are under-supplied with vacant lots.  According to Sage, “It is no secret that Chandler, Gilbert, and Peoria need more vacant developed lots, but many would be surprised to learn that more land development is needed in Surprise, Goodyear, and Queen Creek.”

See rankings and more about Metrostudy below.

Starts By Community

The new-home communities that generated the most new-home starts during the year ending 1Q13 were as follows:

1. Palm Valley (Goodyear) – 314 starts
2. Hastings Farms (Queen Creek) – 309 starts
3. Vistancia (Peoria) – 284 starts
4. Ironwood Crossings (Queen Creek) – 261 starts
5. Power Ranch (Gilbert) – 261 starts
6. Verrado (Buckeye) – 246 starts
7. Estrella (Goodyear) – 227 starts
8. Surprise Farms (Surprise) – 225 starts
9. Freeman Farms (Gilbert) – 213 starts

10.Fireside at Norterra (North Phoenix) – 203 starts

Starts By Submarket

By a wide margin, Gilbert remains the top submarket for new home activity.  Annual starts in Gilbert are up 20% from one year ago, and it now accounts for 18% of all starts in the metro area.  Here are the Metrostudy submarkets ranked by new-home starts during the year ending 1Q13.

1. Gilbert – 1,962 starts
2. Queen Creek* – 1,301 starts
3. Phoenix – 1,058 starts
4. Goodyear – 902 starts
5. Mesa – 892 starts
6. Chandler – 886 starts
7. Peoria – 760 starts
8. Buckeye – 726 starts
9. Surprise – 534 starts

Note: These are based not on incorporated city boundaries but on zip codes associated with specific cities

* Queen Creek includes San Tan Valley in Pinal Co.

Active Adult Market

Starts in active-adult communities are lagging the traditional market.  There were 904 starts in this market segment during the year ending 1Q13, which is up 15% from a year ago (compared to plus 56% overall).  The share of active-adult starts has declined from 13% two years ago to 8% currently.  The top active adult communities in terms of starts over the past year include:

1. Sun City Festival – 141 starts
2. Trilogy at Vistancia – 140 starts
3. Sunland Springs Village – 115 starts
4. PebbleCreek – 90 starts
5. Sun City at Anthem at Merrill Ranch – 88 starts
6. Canta Mia at Estrella – 76 starts
7. Province – 70 starts
8. Trilogy at Encanterra – 48 starts
9. Robson Ranch – 42 starts

10.Mission Royale – 36 starts

About Metrostudy

Metrostudy, a Hanley Wood company, is the largest provider of comprehensive research and insight for the real estate industry. Builders, developers, banks, manufacturers, retailers and many other industries all rely on Metrostudy’s data and analytics to support strategic business decisions at the local, regional and national market level. www.Metrostudy.com

About Hanley Wood

Hanley Wood, LLC is the premier media, information and marketing services company serving the residential, commercial design and construction industries. Through its operating platforms, the company produces award-winning digital and print publications, e-Newsletters, websites, marquee trade shows and events, market intelligence data and custom marketing solutions. The company also is North America’s leading publisher of home plans.

Metrostudy’s new study of housing in markets across the country puts hard numbers to the housing recovery, and provides a detailed look at differences in the trajectory among regions.  The data (collected at the end of calendar year 2012, and newly analyzed) indicate extreme variance among markets and submarkets, with some markets’ single-family production up 90% or more versus a year ago.

Starts of detached homes rose by an impressive 46.9% from year-end 2011 to year-end 2012, and the rebound is starting a virtuous cycle, providing a much-needed boost to personal incomes, which in turn translate into still-higher demand for homes.

It is important to understand the forces that are driving construction activity higher as well as those that are restraining gains in some areas.  In some markets, there are land constraints that work to the advantage of the builders who have lot positions and ongoing projects in those submarkets, keeping the number of head-on competitors low.  Additionally, the builders that have lot positions in lot-constrained submarkets are able to push prices up much more easily, and they have a strong incentive to do so, because:  (1) they can make more profit by selling the homes at higher prices, and, (2) they don’t want to run out of lots too quickly.

Read the rest of this entry »

(Phoenix, AZ – January 29, 2013) The year 2012 was a recovery year for Phoenix homebuilders, with starts logging their first calendar-year gain since 2005.  As resale under supply persists, homebuyers have been turning their attention towards the new-home sector.  This challenged builders’ ability to deliver enough homes to meet the demand, so they raised prices 8% from 1Q12 to 3Q12.  When sales slowed down towards the end of the year, builders generally backed off the price increases, holding prices mostly steady in the 4th quarter.  “Builders had been raising their prices fairly aggressively, but resale home prices have increased at a faster pace over the past year,” said Ben Sage, director of Metrostudy’s Phoenix division.  “In fact, resale prices in Phoenix have gone up faster than any metro area in the country.”

New home starts in the Phoenix area numbered 11,067 during 2012, which represents a 67% increase over the previous year.  This is the largest percentage increase in Phoenix since 1983.  Starts are based on Metrostudy’s lot-by-lot survey of all new construction subdivisions in Maricopa and Pinal Counties.  “Single family construction is particilarly strong in the Southeast Valley, which accounted for 39% of all starts in 2012,” according to Ben Sage.  “Activity is up everywhere, with starts nearly doubling in the Northwest Valley and Pinal County.”

The number of vacant developed lots, or finished lots, in the Phoenix area numbers 54,597.  This is for all product types, including attached product as well as custom lots.  The most active builders want lots that aren’t too small or too big, and there are only 37,144 vacant developed lots in that big-builder size range.  These would last 51 months, which is above equilibrium, but approximately one-third of Metrostudy’s Phoenix-area submarkets are under-supplied with vacant lots.  According to Sage, “Vacant developed lots, which were so plentiful a couple of years ago, have declined to a point that warrants more development in places like Chandler, Gilbert, Peoria, and Desert Ridge.  The increased demand for new homes caught many builders by surprise last year, so they have been scrambling to find land that will allow them to replace their subdivisions that are selling out.”

See rankings and more about Metrostudy below.

Starts By Community

The new-home communities that generated the most new-home starts during 2012 were as follows:

Vistancia (Peoria) – 303 starts

Lyon’s Gate (Gilbert) – 297 starts

Palm Valley (Goodyear) – 289 starts

Power Ranch (Gilbert) – 281 starts

Hastings Farms (Queen Creek) – 240 starts

Verrado (Buckeye) – 230 starts

Ironwood Crossings (Queen Creek) – 215 starts

Surprise Farms (Surprise) – 208 starts

Freeman Farms (Gilbert) – 208 starts

Bella Via (Mesa) – 200 starts

Starts By Submarket

By a wide margin, Gilbert remains the top submarket for new home activity.  Starts in Gilbert are up 61% from one year ago, and it now accounts for 20% of all starts in the metro area.  Here are the Metrostudy submarkets ranked by new-home starts during 2012.

Gilbert – 2,107 starts

Queen Creek* – 1,193 starts

Phoenix – 955 starts

Chandler – 853 starts

Mesa – 849 starts

Goodyear – 812 starts

Peoria – 755 starts

Buckeye – 658 starts

Surprise – 481 starts

Note: These are based not on incorporated city boundaries but on zip codes associated with specific cities

* Queen Creek includes San Tan Valley in Pinal Co.

Master Planned Community Starts

Of the 11,055 starts in the metro area in 2012, 2,922 were in large scale, master planned communities (MPC).  MPCs have garnered a larger share of the overall market since the recession, growing from 15% of starts in 2007 to 26% currently.  It came down a little in 2012, however, as first-time buyer product, which is generally not as prevalent in MPCs, is increasing in volume due to the extreme lack of resale supply in this segment.

It is also noteworthy that starts in active-adult communities are lagging the traditional market.  There were 873 starts in this market segment in 2012, which is up 16% from a year ago (compared to plus 67% overall).  The share of active-adult starts has declined from 13% eighteen months ago to 8% currently.  The top active adult communities in terms of starts in 2012 are as follows:

Trilogy at Vistancia – 155 starts

Sun City Festival – 139 starts

Sunland Springs Village – 103 starts

PebbleCreek – 97 starts

Sun City at Anthem Merrill Ranch – 70 starts

Canta Mia at Estrella – 64 starts

Province – 55 starts

Trilogy at Encanterra – 46 starts

Robson Ranch – 44 starts

Mission Royale – 38 starts

For information contact:
ben sage @ 480.756.9300
email: bsage@metrostudy.com

About Metrostudy

Metrostudy is the leading provider of primary and secondary market information to the housing industry and related industries nationwide. In addition to providing its own primary housing data for approximately 70% of the United States housing market, the company is recognized for its consulting expertise regarding real estate development, marketing and economic issues, and is a key source of research studies evaluating the marketability of residential and commercial real estate projects. Services are offered through an extensive network of offices located in major metropolitan areas throughout the U.S. For more information, visit www.metrostudy.com.

Metrostudy Phoenix 4Q12 Executive Client Briefing

We  will review the local and national economies, the resale market, foreclosures, the results of our fourth quarter comprehensive survey of the new-home market, and our outlook for 2013.  Additionally, we will take a moment to discuss the potential benefits of the Hanley Wood acquisition of Metrostudy for you, our clients.  Please select the link below to register your attendance:

The briefing details are as follows:

When: Thursday, February 7, 2013

Where: Hilton Scottsdale Resort

6333 North Scottsdale Road

Scottsdale, AZ  85250

(480) 948-7750

Time: 8:00 a.m. Continental Breakfast

8:30 a.m. Market Briefing Begins

10:00 a.m. Market Briefing Adjourns

This is an invitation-only event. Attendees will include only current clients and invited guests from homebuilder, developer, and lender organizations. If you would like to bring a guest from another company, they are welcome or if you have any questions  please contact Ben Sage at 480-588-1585

When: Thursday, November 8th, 2012  
8 AM to 10 AM

Where: Hilton Scottsdale Resort at 6333 N. Scottsdale Rd in Scottsdale

This event is limited to subscribers to Metrostudy’s Quarterly Advisory Services. If you are not a current subscriber and you wish to attend the event, please contact Ben Sage: 480.756.9300

(Phoenix, AZ – October 26, 2012) With an under-supply of resale homes on the market in Phoenix, more and more buyers have been looking to the new-home market to meet their housing needs. This turnaround has challenged builders, who have had a difficult time building enough homes to meet buyer demand. Builders were starting to sell out of their communities faster than they could replace them, and their costs are going up. They have responded by limiting sales in some of their communities and raising prices an average of $15,000 from March to September, a 7 percent increase. “This is the first wide scale increase in prices since 2005, but the increases are still lower than that of resale pricing over the same six-month period,” said Ben Sage, director of Metrostudy’s Phoenix division.

New home starts in the Phoenix area numbered 9,975 during the year ending 3Q12, which represents a 66% increase over last year. Starts are based on Metrostudy’s lot-by-lot survey of all new construction subdivisions in Maricopa and Pinal Counties. “Housing supply, both new and resale, is very tight as record-low mortgage rates and an improving economy are fueling home sales,” according to Ben Sage. “From an historical perspective, new-home sales are still rather low, but many builders are reporting a two-fold increase in sales so far this year compared to 2011.”

New-home inventory, which includes under construction homes, has gone up this year from 5,744 units at the end of 2011 to 7,145 in 3Q12. Importantly, however, the number of new-home inventory units that are finished but vacant has fallen from 2,438 at the end of 2011 to 1,934 at the end of the third quarter, a 21 percent decline. “The increase in total new-home inventory reflects the increased demand, while the decline in finished vacant inventory indicates that builders can’t keep up with demand,” said Sage.

“Builders are starting homes about as fast as they can, and they are scrambling to find land so they can grow with the market. They have raised prices, but these price increases will moderate as the seasonal slowdown this time of year allows builders to come up for air,” said Sage. “The old adage of ‘be careful what you wish for’ applies to builders, but they are pleased to be dealing with the new challenges facing them with this turnaround.”

See rankings and more about Metrostudy below

Starts By Community
The new-home communities that generated the most new-home starts during the year ending 3Q12 were as follows:

1. Lyon’s Gate (Gilbert) – 344 starts
2. Vistancia (Peoria) – 290 starts
3. Power Ranch (Gilbert) – 286 starts
4. Palm Valley (Goodyear) – 236 starts
5. Circle Cross Ranch (Hunt Hwy) – 201 starts
6. Ironwood Crossings (Hunt Hwy) – 194 starts
7. Seville (Gilbert) – 191 starts
8. Verrado (Buckeye) – 190 starts

Starts By Submarket
By a wide margin, Gilbert remains the top submarket for new home activity. Starts in Gilbert are up 86%, and it now accounts for 20% of all starts in the metro area. Here are the Metrostudy submarkets ranked by new-home starts during the 4 quarters ending 3Q12.

1. Gilbert – 2,043 starts
2. Queen Creek* – 970 starts
3. Chandler – 825 starts
4. Phoenix – 815 starts
5. Mesa – 746 starts
6. Goodyear – 679 starts
7. Buckeye – 630 starts
8. Peoria – 625 starts
9. Surprise – 408 starts

Note: These are based on Metrostudy submarkets and not incorporated city boundaries
* Queen Creek includes San Tan Valley in Pinal Co.

Master Planned Community Starts
Of the 9,975 starts in the metro area over the past 4 quarters, 2,745 were in large scale, master planned communities (MPC). MPCs garnered a larger share of the overall market since the recession, growing from 15% of starts in 2007 to 28% currently. It has come down a little this year, however, as first-time buyer product, which is not as prevalent in MPCs, is increasing in volume due to the extreme lack of resale supply in this segment.

It is also noteworthy that active-adult communities are not participating in housing’s upward trend right now. There were 826 starts in this market segment over the past 4 quarters, which is unchanged from two years ago. The share of active-adult starts has declined from 12% one year ago to 8% currently. The top active adult communities in terms of starts over the past year are as follows:

1. Trilogy at Vistancia – 161 starts
2. Sun City Festival – 134 starts
3. Pebble Creek – 92 starts
4. Sunland Springs Village – 86 starts
5. Province – 60 starts
6. Canta Mia at Estrella – 51 starts
7. Sun City at Anthem Merrill Ranch – 40 starts
8. Mission Royale – 39 starts

For information contact:
ben sage @ 480.756.9300
email bsage@metrostudy.com

About Metrostudy
Metrostudy is the leading provider of primary and secondary market information to the housing industry and related industries nationwide. In addition to providing its own primary housing data for approximately 70% of the United States housing market, the company is recognized for its consulting expertise regarding real estate development, marketing and economic issues, and is a key source of research studies evaluating the marketability of residential and commercial real estate projects. Services are offered through an extensive network of offices located in major metropolitan areas throughout the U.S. For more information, visit www.metrostudy.com

There are countless stories with the moral of “be careful what you wish for”, perhaps the most famous being that of King Midas. Another similar story was relayed in the movie Harry Potter and the Deathly Hallows (Part 1). One of the characters reads a fable about three brothers who cheated Death … with Death, in this instance, taking an incarnate form. I was curious if J.K. Rowling originated this story or if she borrowed it. After researching this, it appears that it may have been spawned from one of Geoffery Chaucer’s Canterbury Tales from the 14th century, “The Pardoner’s Tale”. In this story (told by The Pardoner), three drunk men set out from a pub to find and kill Death, whom they blame for the passing of their friend. They find an old man who tells them that they can find Death at the foot of a nearby oak tree. When the men arrive at the tree, they find a large amount of gold coins instead, which makes them forget about their wish to find Death. They decide that they would sleep at the oak tree overnight so they can take the coins in the morning. The three men draw straws to see who among them should fetch wine and food while the other two wait at the tree to guard the loot. The youngest of the three men drew the shortest straw. Once he is gone, the two that remain plot to overpower and kill the young man when he returns. Meanwhile, the one who departs for refreshments decides to lace the wine with rat poison. When he returns with the food and drink, the other two kill him. Then the two that remain drink the poisoned wine, dying at the feet of their victim. In the end, all three have found death.

(Note: Please click on the chart to view a larger image)

“Be careful what you wish for“… Throughout 2011, we were all wishing for a return of new-home demand, which certainly arrived in the spring of this year.   Read the rest of this entry »

(Phoenix, AZ – July26, 2012) Demand for new homes is up sharply from last year as buyers that are discouraged with the bidding wars for resale homes turn to homebuilders, according to Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.

New home starts in the Phoenix area numbered 8,640 during the year ending 2Q12, which represents a 50% increase over last year.  Starts are based on Metrostudy’s lot-by-lot survey of all new construction subdivisions in Maricopa and Pinal Counties.  “Supply on  the resale side is very tight, yet there is demand for housing as the economy is picking up,” said Ben Sage, director of Metrostudy’s Phoenix division.  “Builders are reporting strong sales, and they are have been raising prices or even capping sales in some of their communities in an attempt to control the demand.”

New-home supply is also down, which indicates that builders are constructing homes only to meet current demand rather than building on spec.  The number of new inventory units that are finished but empty, many of which are sold, fell 33% from this time last year and now number only 1,433 units, which is the new low point for this housing cycle.  This represents a 2.1-month supply, “which is normal” said Sage.  “The low count of new homes in inventory has been critical to the early stages of this recovery.  Builders cannot satisfy demand from their current inventory of homes.  New units have to be started when a buyer comes through the door.”

“Builders are actually bumping up against their capacity limits right now.  New consruction requires labor, materials, and expertise that doesn’t grow on trees,” said Sage.  “Demand has just about doubled, but the industry was not prepared for this level of activity.  Builders started 3,061 units in the second quarter, but building permits were well ahead of that.  The builder has pulled the permit, but they are having to wait for the cement mixer to come pour the slab.”

For information contact:
ben sage @ 480.756.9300
email bsage@metrostudy.com

About Metrostudy
Metrostudy is the leading provider of primary and secondary market information to the housing industry and related industries nationwide. In addition to providing its own primary housing data for approximately 70% of the United States housing market, the company is recognized for its consulting expertise regarding real estate development, marketing and economic issues, and is a key source of research studies evaluating the marketability of residential and commercial real estate projects. Services are offered through an extensive network of offices located in major metropolitan areas throughout the U.S. For more information, visit www.metrostudy.com.

Starts By Community
The new-home communities that generated the most new-home starts during the year ending 2Q12 were as follows:

1. Lyon’s Gate (Gilbert) – 376 starts
2. Power Ranch (Gilbert) – 306 starts
3. Vistancia (Peoria) – 248 starts
4. Palm Valley (Goodyear) – 199 starts
5. Verrado (Buckeye) – 178 starts
6. Seville (Gilbert) – 168 starts
7. Morrison Ranch (Gilbert) – 159 starts

Starts By Submarket
Starts are picking up as each of the top 9 submarkets generated double-digit percentage growth from this time last year. Starts in Gilbert are up 98%, and it now accounts for 22% of all starts in the metro area. Here are the Metrostudy submarkets ranked by new-home starts during the 4 quarters ending 2Q12. The percentage change from last year is also shown:

1. Gilbert – 1,923 starts (+98% compared to one year ago)
2. Phoenix – 911 starts (+44%)
3. Chandler – 754 starts (+26%)
4. Peoria – 704 starts (+43%)
5. Queen Creek* – 699 starts (+65%)
6. Mesa – 663 starts (+46%)
7. Goodyear – 596 starts (+20%)
8. Surprise – 576 starts (+61%)
9. Buckeye – 569 starts (+79%)

Note: These are based on Metrostudy submarkets and not incorporated city boundaries
* Queen Creek includes San Tan Valley in Pinal Co.

Master Planned Community Starts
Of the 7,409 starts in the metro area over the past 4 quarters, 2,496 were in large scale, master planned communities (MPC). MPCs have garnered a larger share of the overall market, growing from 15% of starts in 2007 to 29% currently. The percentage share has most likely peaked as first-time buyer product, which is not as prevalent in MPCs, is increasing in volume due to the extreme lack of resale supply in this segment.

It is also noteworthy that active-adult communities are not participating in housing’s upward trend right now. There were 752 starts in this market segment over the past 4 quarters, which is essentially unchanged from this time last year. The share of active-adult starts has declined from 13% one year ago to 9% currently. The top active adult communities in terms of starts over the past year are as follows:

1. Trilogy at Vistancia – 156 starts
2. Sun City Festival – 134 starts
3. Pebble Creek – 88 starts
4. Sunland Springs Village – 62 starts
5. Sun City at Anthem Merrill Ranch – 54 starts
6. Canta Mia at Estrella – 42 starts
7. Province – 41 starts
8. Robson Ranch – 37 starts

In 1995, movie audiences worldwide were introduced to the story of Apollo 13, which recounted NASA’s efforts to get three moon-bound astronauts back to earth after an explosion severely damaged their spacecraft. I was actually quite familiar with the story before the movie release, as I had seen a PBS documentary and read the book Lost Moon by Jim Lovell, Apollo 13’s commander. After the explosion, which damaged the service module’s oxygen tanks, the astronauts had to shut down the spacecraft’s power to conserve battery life. After sling-shotting around the moon and bypassing a moon landing, it was eventually time to power the command module back up for earth re-entry. The power that remained, however, was very low, and the NASA team of engineers had to devise a meticulous power-up procedure that would work within the parameters of the remaining battery life. You may recall Jack Swigert, played by Kevin Bacon, entering the dark, lifeless command module to execute the procedure. The spacecraft was cold, and the controls were covered in condensation. He carefully followed the instructions, got the ship powered up, and they returned to earth safely in a mission that was later described by Lovell as “a successful failure” in that they all survived but failed to land on the moon.

Apollo 13 Damaged Service Module

The mission brought challenge after challenge, with nothing going as planned, resulting in numerous teams working around the clock to tackle each obstacle. Even powering up the spacecraft was an ordeal; they couldn’t simply flip the switch. Arizona builders are learning a similar lesson. After navigating a tumultuous housing market that barely had a pulse from the second half of 2010 to near the end of 2011, builders are scrambling to meet a sudden increase in demand from homebuyers this year. According to Metrostudy’s weekly survey of selected homebuilders, net contracts have more than doubled from an average of .45 weekly sales per subdivision in 2011 to .93 this year. In other words, sales contracts have grown from an average of less than 2 sales per month (per sub) to a little over 4 sales per month. Demand is back, so now all we have to do is build them, right?   Read the rest of this entry »