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E.V. bucks trend with home permit increase

E.V. bucks trend with home permit increase

Tribune

January 21, 2010

The Valley’s new home market may have hit a new modern-day low last year, but the East Valley bucked that trend with an increase in new home construction permits, according to the latest Phoenix Housing Market Letter from analyst RL Brown.

Valleywide, permits dropped below the previous record low of 10,614 in 1990. Some 8,027 permits were issued last year, down 24 percent from that year.
However, total permit activity in Chandler, Gilbert, Mesa and Queen Creek increased from 2,161 in 2008 to 2,601 last year.

“These cities, with the exception of Queen Creek remaining flat (190 in 2008 vs. 186 in 2009), all had an increase in permits despite the downturn in the market that we experienced,” said Greg Burger, co-principal of RL Brown Housing Reports. “I think it’s really attributed to the fact that the builders adjusted the values to meet the market demand or market need. Also, the perception overall is Mesa-Gilbert can tend to have larger lots, which attracts buyers obviously.”

A permit is issued by a municipality for each house prior to the start of construction, and the number of permits is viewed as a good measure of upcoming home construction.

Valleywide, permit activity last month totaled 799, up 119 percent from 365 in December 2008. Compared to all of 2008, however, permit activity was down 36.2 percent last year.

Tempe-based Fulton Homes and Gilbert-based Blandford Homes had six of the busiest communities in the East Valley last year based on permit activity, Burger said. Of the 2,601 permits issued last year in Chandler, Gilbert, Mesa and Queen Creek, 713 were issued to Fulton and Blandford.

“Blandford went in and acquired new lots at low prices from builders that unfortunately collapsed in the downturn in the market,” he said. “It allowed them to come in with new product at new prices. Fulton Homes adjusted their prices to meet the new market demand.”

Among its busier communities, Fulton Homes was issued 134 construction permits for its Freeman Farms community in Gilbert, and 70 for its Cortina community in Queen Creek.

“We seem to have hit the mark with our product and our pricing, and we basically got really aggressive,” said Doug Fulton, CEO of Fulton Homes Sales Corp. “We really took on the foreclosure market. We took that huge wave of traffic that was out there searching, treasure hunting for that one foreclosure that’s going to fit their needs perfectly and focused the traffic into our model homes.”

Last March, Blandford purchased 229 developed residential lots at Tuscan Villas at Painted Mountain in northeast Mesa. The builder was issued 177 construction permits last year in that community.

Also in Brown’s latest report, new home sales totaled 10,869 Valleywide last year, down 47.1 percent from 20,547 in 2008. Sales totaled 2,796 in Chandler, Gilbert, Mesa and Queen Creek, down 30 percent from 3,998 in 2008.

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