By Callan Smith | Rose Law Group Reporter
Homebuyers were active in Tucson last year, from February 2016 through January 2017, new home sales were up 18 percent over the previous 12-month period, said Jim Belfiore at the Belfiore Real Estate Consulting Tucson Market Update on Thursday.
“Homebuyer traffic is stronger and it looks like we’re going to have a very good spring,” said Belfiore.
On average, Tucson home builders had 1.9 subdivision sales per month over the last 12 months, with January numbers coming in at 1.7 sales per subdivision, showing a healthy increase over January last year at 1.3 sales, Belfiore said.
“Sales per subdivision last year were up at the highest levels since we’ve been collecting Tucson data in late 2012,” said Belfiore.
The subdivision count for Tucson is 96 active communities, of those the top subdivisions are Classic at Saguaro Bloom by D.R. Horton, Summit at Center Point Vistoso by Maracay Homes, Symphony at Madera Highlands by Meritage Homes, Signatures at Star Valley by Lennar, and Artistry at La Estancia by Meritage Homes.
The top builders, which Belfiore compiles by highest sales volume on average, are Meritage Homes, Maracay Homes, D.R. Horton, Lennar and Pulte Homes.
The Tucson market experienced less of the seasonally expected typical dips in sales in late summer and around the holidays with one small dip approaching December, “but the dips haven’t been as significant as we’ve seen in the past,” said Belfiore.
Existing home sellers are in a good place, as “supply has languished into what is undoubtedly a sellers’ market, with resale home sales up five percent,” said Belfiore.
Resale supply is low with only 3800 units on the local MLS in Tucson compared to last year which was at 4200 to 4300 units, making home builders the beneficiaries of the low supply, said Belfiore.
Tucson’s good outlook is not without one negative. The distressed home supply is relatively high at nine percent of existing homes on the MLS compared to the Phoenix market, which is at four to four-and-half percent, said Belfiore.
Speculative supply is low at 246 units heading into the spring sales season, but Belfiore is not concerned, “The reality is that last year home builders built fewer homes than they sold. While permits were down last year to 2164, the year prior permits they were up. We’re expecting at least six percent growth in the coming year, which might double, depending on how spring plays out,” said Belfiore.
Sean Walters, Chief Operating Officer of Sunbelt Holdings, asked a question of Belfiore regarding speculative supply, “How much of the lower speculative level, if anything, has to do with low lot inventory?”
“Undoubtedly,” said Belfiore, “builders don’t have the lots to create supply.”
Builders are feeling the pressure from rising costs and lack of new home price appreciation, which is an ongoing issue and the crux of the housing discussion in the state of Arizona, said Belfiore.
“We would expect lot purchases to go up, but the lack of appreciation makes those purchases a challenge as the costs of building homes continues to go up,” Belfiore said.
Belfiore is optimistic that over the next three months with supply as tight as it is in Tucson prices will go up on the resale side. For new homes, Belfiore said that prices must go up so builders can afford new lots and to accommodate rising costs in labor and materials, such as lumber.
For the Tucson market, Belfiore said he is suggesting that new home price appreciation will be four to six percent in 2017 and three to five percent in 2018.
“The cost of building a house is not going down, prices have to increase,” said Belfiore.