Tucson “Finding Balance” Land and Housing Forecast Event to be held Nov. 1

TUCSON, Arizona —  On Wednesday, November 1, the Land Advisors Organization and Bright Future Real Estate Research will be holding their annual Land and Housing Forecast.  The roster of speakers includes Will White (Land Advisors Organization), Ginger Kneup (Bright Future Real Estate Research), Walter Richter (Southwest Gas), Keri Silvyn (Silvyn & Bangs), Greg Abrams (Pulte Homes), Jeff Grobstein (Meritage Homes), and Jeff Nielsen (Toll Brothers).

The theme of the event is ‘Finding Balance’, which is appropriate considering the growing divide between Tucson’s inevitable growth and the ability to provide inventory to ready, willing, and able consumers.  The discussion will provide an overview on the current state of our real estate environment, how we got here, what the implications of this current state of imbalance are, and – most importantly – what we can do to better position Tucson for the future.

Will White commented, “We are looking forward to the event again this year on November 1st at the Ritz Carlton. Every time we put it on we learn something new about the market here. Whether it is my talk on land , Ginger’s on housing, or the great homebuilder panel discussions, there always seems to be new information coming out. This year’ event is called “Finding Balance” and I think it is very appropriate at this point in Tucson’s housing market progression. We will really dig into the supply and demand situation in Tucson and work to explain how we got here and what the future holds for our market”

This event is typically attended by a ‘who’s who’ of the Tucson real estate community, and is unique in that all net proceeds from the event are contributed to Big Brothers Big Sisters of Tucson.  A great event benefitting a great cause; how can you go wrong with that?

The specifics of the event are as follows:

DATE:             Wednesday, November 1, 2017
TIME:              2:30 Registration, 3:00 Program, 5:00 Networking Reception
LOCATION:      Ritz-Carlton Dove Mountain
COST:             $75 per person
REGISTER:      www.landadvisors.com/events




Best Tucson Permit Volume in 10 Years Last Year

Aaron Mendenhall (middle) receiving trophy from  CCIM Regional Director and James Robertson, Jr, CCIM, former President Southern Arizona CCIM Chapter

TUCSON, Arizona — Aaron Mendenhall, an Associate with Chapman Lindsey Commercial Real Estate was this year’s winner of the Southern Arizona CCIM Forecast in the residential land use category. Mendenhall had predicted a year prior 2,949 permits while the actual number was 2,928 permits, a difference of only 21 permits.

According to Ginger Kneup, publisher of Bright Future Real Estate Research, homebuilders pulled 241 new home permits in January, the highest volume in ten years. This is also nearly a 70% increase year-over-year.

For comparison, Phoenix experienced a 12% year-over-year increase in permits.

Resale inventories remain tight, particularly in critical move‐up price ranges where new homes compete best. The Tucson Association of Realtors reported an increase in total sales of about 14% for January concurrently with a near 25% fall in active listings.

Builders need to have inventory homes underway for the selling season to better capture buyers out of the resale market. Again, given the strong selling season of 2016, builders have more confidence to seed inventory homes in anticipation of an even better Spring this year.

It is likely that permit trends will continue to be strong in the near term as about 350 more lots in eight communities are delivered for Spring. Model and inventory home seeding for new communities always boosts permit counts. Nonetheless, accounting for current permitting trends and lots under development, it is likely that we will enter 2018 with about 1,000 fewer finished lots. Home builders will sell more lots in 2017 than they will bring to market in total. The Spring market will be well‐supplied across price points and meet the expected strong demand. Lot inventories later in the year will feel pressure.

This led Mendenhall to predict that 2017 will see 3,878 permits while 2018 is predicted to fall back as the more affordable (and higher volume) lots thin significantly.

Other predictions in the land category competition were slightly more conservative, Thrac Paulette of Cantera Real Estate forecasts a total of 3,276 permits in 2017 while John Carroll of Land Advisors Organization predicts 2,700 permits this year.

To learn more, Mendenhall can be reached at 520.747.4000, Paulette is at 520.904.5055 and Carroll can be contacted at 520.514.7454.

 




New Home building permits up 39% in Metro Tucson for March

Change in Volume permits1
Click to enlarge

Analysts say home building permits were up 39 percent last month in the Tucson metro region, and they expect growth to continue this year. Homebuilders are reporting March to be their best month since 2008 for single family home permits and signs of strong sales.

New home permits rose to 271 in March, up from 206 in February and 143 in January 2016, totaling 620 permits for the quarter, the strongest the region has seen since 2008

According to Ginger Kneup, publisher of the Orange Report, “There have been only two months in the last few years that had volumes in the 280s, but permitting in both instances was artificially higher as builders pulled permits speculatively in advance of fee changes. The permit activity of March offers some real hope in terms of demand as it appears to be in response to new sales.”

Kneup continues, “There was a 15% drop in the stock of inventory homes which would suggest that permitting was demand driven last month. Furthermore, only one community that was not yet started selling pulled permits (La Estancia by Meritage), indicating that seeding of inventory homes was not a relevant factor in the March surge.”

Nearly 80% of the permit activity (213 homes) occurred in the single family production inventory. “March Active adult permitting dropped to a 12% share and custom home activity fell to a 10%. 2016 has been the most positive and least volatile quarter of the last 15 months,” according to the Orange Report.

In Q1 2016, the market issued one new home permit for every 6.3 resale homes sold – a leading indicator to suggest about a 2%+ increase in new home market share.

Will White of Land Advisors Organization commented, “We are seeing great news from homebuilders regarding the 2016 selling season so far. Let’s not forget that adding fuel to the fire is that homebuilders have significantly increased their market share goals in Tucson. Securing a multi-year land pipeline to carry out those larger business plans has proven to be difficult.”

DR Horton pulled a total of 57 permits in March, followed by Pulte / Del Webb with 35 permits. Richmond American pulled 31 permits las month in nine communities while Meritage was fourth with its 26 permits supported largely by its newest communities at La Estancia (14) and The Estate at Capella (7). Maracay Homes closed out the top five homebuilder permit volume list with 24 permits in March.

White says, “The land and lot supply shortage will accelerate as the numbers perform over and above expectations. All indications are it is going to get very busy on the land side here. Not really a question of ‘if’ just ‘when’.  There is no ‘off’ button on the land machine, it is always churning. The faster it goes, the faster it needs to be replaced.”

New home closings were also up 21 percent in March from 152 in 2015 to 193 for 2016. This from a 26 percent increase a month prior.

A significant land sales in March included the 173-acres of undeveloped land purchased by Mattamy Homes from the City of Tucson for development in the southeast Tucson submarket, across from Civano masterplan community.

White sees the problem coming soon to the Tucson market will be a shortage of entitled lots. As the sales and permits stay strong, there will become an urgency to getting lots prepped for 2017 and there remains only a few spots in town for homebuilders to do that in time for 2017 inventory purchases.

This trend is predicted to continue as more buyers choose new.