New Home Construction On The Rise In The West Valley

Published: Monday, December 14, 2015 - 5:05am
Updated: Monday, December 14, 2015 - 4:15pm
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(Photo by Matthew Casey - KJZZ)
A worker put wiring on the outside of a home under construction in Buckeye. Covering a house in wire usually takes about two days.
(Photo by Matthew Casey - KJZZ)
Homes under construction in the roughly 9,000-acre Verrado Community in Buckeye. Verrado opened in 2004 and is a master-planned community developed by DMB Associates Inc.
(Photo by Matthew Casey - KJZZ)
Tracy Simmons is director of marketing for DMB Associates Inc.
(Photo by Matthew Casey - KJZZ)
Ken Peterson is vice president of sales and marketing for Scottsdale-based Shea Homes.

It takes a couple of days to cover the outside of a new home in wire so another crew can install the permanent facade. But job security for hammer-wielding workers extends well beyond one house’s exterior.

That’s because when work is done on one house in the roughly 9,000-acre Verrado community near the White Tank Mountains in Buckeye, the rest of the block has half-built houses where workers can apply their construction skills.

Buckeye has reported a significant increase this year in new home construction and most West Valley cities have already surpassed the number of single family building permits they issued in 2014.

“It’s still one of the best values in the entire Valley because you can buy a home in Verrado, in a mountain setting like this, for a price point you can’t find in a lot of other areas in Phoenix,” said Tracy Simmons, director of marketing for DMB Associates, a developer of master planned communities like Verrado in Buckeye and Marley Park in Surprise.

Opened in 2004, Verrado could have been a poster child of the Great Recession — incomplete subdivisions, vacant homes — evidence an unsustainable boom economy.

But DMB stuck with it, even buying back land from builders who couldn’t meet their obligations. The strategy paid off, Simmons said. About one-third of the single-family home permits issued by the city of Buckeye this year were for homes in Verrado.

“You know those were dark years for everyone, but we’ve come back and done extremely well,” Simmons said.

Data show Buckeye isn’t the only place in the West Valley with a re-emerging new home market. Peoria and Goodyear actually issued more permits than Buckeye this year. And almost every other city west of Phoenix is building more new homes than they did in 2014.

“We still have some room to grow that I would classify us as a full recovery,” said Ken Peterson, vice president of sales and marketing for Scottsdale-based Shea Homes. “I think it's going to take a couple more years.”

Shea Homes is building a gated community in Verrado on land it purchased after DMB bought it back from a failed builder, Peterson said.

The number of new home permits issued Valley-wide grew from last year by about one third to roughly 15,000, Peterson said. But that’s still 10,000 to 13,000 fewer permits than what Peterson would consider full recovery from the Great Recession.

To get there, Peterson said unemployment must continue to drop.

“We need to create jobs for our residents and we’re not there yet, but we’re working diligently to get there,” said Len Becker, Buckeye’s economic development director.

Buckeye added a thousand jobs over the last few years, Becker said. The city is now targeting more healthcare, agriculture, manufacturing and distribution industries for adding more employment opportunities. And a partnership with Arizona State University’s Entrepreneurship Outreach Network could lead to a new co-working facility.

Evidence that home builders believe in a jobs strategy hums from construction sites in Verrado. Peterson said bang-for-buck and increased connectivity through projects like Loop 303 are two reasons why Shea Homes currently has as many projects in the West Valley as it does on the opposite side of town.

“I think in the past we’ve predominantly had a few more communities in the Southeast Valley,” Peterson said. “It’s kind of interesting when you take a look at the list and say, ‘Gosh we’re equal.’ And I think you’ll see a little bit more of that.”

But does an increase in new home construction across the entire Valley mean Arizona is flirting with the same mistakes that caused the recession to hit this state harder than many others? Michael Orr, director of the Center for Real Estate Theory and Practice at ASU’s W.P. Carey School of Business, doesn’t think so because housing demand is restricted by the difficulty of getting a mortgage.

“I don’t think we are going to see the enormous over provision of finance, which is really what drove the bubble here and in many other places,” Orr said.

Buyers are more cautious than they were 10 years ago, Peterson and Simmons agree. Consumers no longer see a house as just an investment, according to Peterson. Instead they view it as a place to make memories.

 

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