New Home Builders are Evolving

by Steven Hoover

Today's homebuilders are faced with a myriad of challenges when it comes to attracting new home buyers. Not only are they trying to survive in the most challenging real estate climate ever, they face competition from an abundance of resale homes. Fortunately for home buyers, this has created a challenge for builders to provide the best "bang for the buck."

One of the greatest costs builders carry today is the cost of the land. As we've heard in recent months, many builders have made the tough decision to let land they owned go back to the landholders and banks because with the high cost of the land at the time of purchase combined with the cost to construct a home, they could not be competitive in today's market.

Hence, we as consumers will begin to see a transition to higher density projects, which translates into more homes per square foot of land such as condominiums, townhomes and attached homes. This is not unusual in much of the country, but it is relatively new scenario for the Arizona market where we've traditionally has an abundance of low-cost land and the room to spread out development.

In many parts of the U.S., however, land is scarce, high priced or both. Imagine a typical "Arizona" master planned community in Manhattan! Can you imagine the cost of the land alone? Fortunately for the builder and the consumer in our market, the conditions are not likely to go to that extreme. But local builder/developers will face challenges from a stressed economy, and we will likely see higher density projects on a larger scale over the next few years.

If you've lived in the valley for more than 25 years, the following will sound familiar to you. There was a time when Phoenix homebuilders bought small parcels of land and built 30, 40 or 50 homes at a time. Master planned communities were virtually unheard of outside of DelWebb's Sun City. The conditions that propelled this practice included a mediocre economy, horrendous interest rates and a much smaller customer base.

Consumers of the era were accustomed to these conditions and purchased homes because of location. (Remember when that was the driving factor?) People bought homes to live in-not as investments-and because they liked the area for its proximity to their place of work, entertainment or friends and family. Only in the last two decades has it become commonplace for Valley residents to forego those benefits for the lure of more land, extravagant amenities and areas where one could find new housing that was very affordable-even if it was a considerable drive from core metro areas.

Back to Basics

Today, Valley builders are regrouping and developing projects that are much different from recent years. The vast greenbelts, huge parks and community centers may be gone for good, replaced by "pocket parks" or community open spaces tucked within neighborhoods. Obviously, land cost are attributing to this trend, but also builders are developing much smaller in-fill parcels in more urban areas that don't afford the space for such luxuries.

This is not to say that the new communities will not have great aspects. To the contrary, these communities will offer many things homeowners couldn't have hoped for in the past. Many new, high-density developments have a much greater focus on a healthy lifestyle, with on-premises fitness centers. They also focus on energy efficiency, renewable source building materials and other environmentally responsible attributes.

In addition, communities will be developed at reasonable prices with aspects that make them more affordable to sustain and to live in. The demands for solar is on the rise and more and more builders will offer solar options in new homes. Today's new-home communities have as much appeal on the inside as homes of the past decade had on the out.

It may take some getting used to, but residents of our great metropolis may find this a good change. Imagine finding a home in a smaller community where you actually know your neighbors' names, know whose children are playing in the park, have a 10-minute commute to your office or can walk to the Light Rail. Evidence of the demand for such communities has spurred the development of a number of new mixed use and high-rise communities within the past few years.

"Transplants" coming from dense urban area across the country bring this concept of living with them. They're used to the corner market and dry cleaners being on the bottom floor of the same building in which they live and sometimes even work. They're also accustomed to catching a ride on public transportation to a restaurant, ballgame or other entertainment. These concepts are quickly becoming a reality in our great city. It's a new face for the Old West but in many ways, greatly past due as vehicle traffic continues to have a negative impact on our environment and the increasing cost of living has us looking at new options.

As a native Phoenician working within the construction industry, this tells me that as our communities are changing, so must I evolve. I still can enjoy the wide-open spaces that surround us but can also look forward to the new look of our town. I look forward to projects created in unison by municipalities and homebuilders that offer a harmonious environment to live and work in. I look forward to responsible development that will not only make better use of the land as a resource, but will provide beautiful spaces for citizens to enjoy. I look forward to living in, what always has been and what will always be, this great city.

Steven Hoover is Principle of Valley Crest Landscape Development.

www.valleycrest.com
480.575.8448