Tucson Housing Market focused east to Oro Valley along Tangerine Corridor

image_pdfimage_print

lots sales 450x250The Tucson housing market continues to move along at a steady pace, finished lot inventories continue to drop, but both builders and investors are purchasing more land at an increasing rate. So far in this year land transaction counts have increased from 7 in Q1 to 13 in Q2 to 19 in Q3. The combined values of these transactions have also been increasing significantly: $10.1 million in Q1, $26.7 million in Q2 and $66.6 million in Q3. (DR Horton purchased the balance of Saguaro Bloom for $42 million in September)

Although we are currently 43 permits behind where we were last year at this time, both the second and third quarter permit counts are higher than their respective quarters in 2014. The first quarter dip this year, due in large part to the large number of permits pulled in Tucson at the end of 2014, is what is keeping us behind last year’s pace.

Housing starts show an even stronger trend. There were 424 new homes started in Q3 2015 which was the highest number of 3rd quarter starts since 2009. Q2’s 461 starts was also the highest number of starts for that quarter since 2009. The increasing number of new homes in Tucson is positive news. However, finished lot inventories continue to decline as builders are starting new homes faster than new lots are being developed. In Q3 there were 210 new finished lots added to existing communities. This is the fewest number of new finished lots in a quarter in two years. This trend is about to change.

There are currently 10 communities under construction throughout Tucson; 6 in the NW, 3 in the NE and 1 in the SE. When completed these will introduce nearly 900 new SFR lots, and at least 360 could be completed the last quarter of 2015.

As has been the trend in recent years, the Northwest submarket has been the most active in land sales, development and home sales. Other the Northeast and Foothills, it is also has the highest home prices. Since the beginning of 2013 there have been approximately 4,120 new SFR homes closed in the Tucson area. Of those 2,100 (51%) were in the NW submarket. The NW average new SFR home sale price YTD in 2015 is $278,902 which is more than $14,000 higher than the overall Tucson area average of $264,729. The average price per square foot in the NW is approximately $122 vs. $115 per square foot for the Tucson Metro area. (this does not include custom home sales)

Within the Northwest submarket, the Tangerine Corridor has been the crown jewel with the Dove Mountain area leading the way. Since January 2013 there have been approximately 844 traditional SFR homes sales in the corridor with an average sale price of $343,586 which is $64,684 higher than the NW submarket average. Within the corridor, Dove Mountain area communities have been selling over 60% of the homes with average prices only slightly higher than in Oro Valley.

The focus on Dove Mountain is evident in the 520 new SFR lots developed in the area in the past three years. Toll Brothers and Mattamy Homes both entered the Tucson market here with 72 and 172 lot communities respectively. This base of inventory will help Dove Mountain continue on for several years. However, the only lots currently being developed in the area is a new 7 lot subdivision of 3.3+ acres lots by Cornerstone Homes. There are very few existing platted communities available in the Dove Mountain area that are immediately developable – Sonoran Preserve being one of the few. There are future blocks within Dove Mountain and there are several projects in various stages of planning in the immediate area but are running up against various development issues as well as the typical time required for zoning and entitlements.

Oro Valley introduced only 145 new SFR lots since 2013. However there are several projects that have been in the making for some time and are coming out of the ground. There are currently four active development projects that will yield 548 SFR lots within the next year including Maracay’s CenterPointe at Vistoso, Lennar’s Eagle’s Rest, Insight’s La Canada Ridge and Meritage’s Estates at Capella. Mattamy also has purchased land in Rancho Vistoso and is finalizing its plats and hopes to start breaking ground soon on more than 300 lots.

The Tangerine Corridor is still the place builders wish to be with its strong sales and high home values, but it appears Oro Valley is becoming the new focus of attention. We look forward to many new communities here and throughout the Tucson market in the upcoming years.

Please contact us for additional insight and information.