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Lillian Wong
Senior Mortgage Loan Officer
14850 N. Frank Lloyd Wright Blvd. 
Scottsdale, AZ  85260
Email:   Lillian@LillianWong.com

 Home builders resume work in once-abandoned developments By J. Craig Anderson The Arizona Republic 08.14.09 

But in recent months, lenders and land investors have been selling the vacant portions of those communities to other home builders, who are picking up where their failed competitors left off.

Existing residents in those communities are happy to see the tumbleweeds, litter and construction debris replaced with landscaped yards and new neighbors.

Home builders see a limited opportunity to build and sell homes quickly and inexpensively, because all of the grading, paving, plumbing, cabling and wiring are already done.

Blandford Homes, Meritage Homes, Richmond American Homes, Lennar Homes and K. Hovnanian Homes all have taken over the development of subdivisions established by builders who were once competitors.

Phoenix real-estate analyst Jim Belfiore of Belfiore Real Estate Consulting said companies are taking full advantage of recent moves by lenders to sell off finished lots in desirable areas.

"They're building the homes, and they're building them fast," he said.

Desirable locations to buy into a half-built project include Litchfield Park , Deer Valley , Avondale, Maricopa, east Mesa and Gilbert, according to builders and local real-estate professionals.

The hottest spot for pinch-hitting builders may be Chandler , where real-estate agent Amy Jones said visiting a subdivision like Blandford Homes' Portello is like a time warp back to the boom.

"It was incredible," said Jones, who is with RE/MAX Excalibur in Chandler . "When I was in there, it was like we were back in 2003."

Jones said first-time home buyers were literally lining up to buy a Blandford home in the community formerly known as Portello at Dobson Crossing, near Queen Creek Road and Arizona Avenue .

It was originally constructed by builder Randall Martin Home in 2005.

Executives at Blandford, developer of the Las Sendas community in east Mesa , said they have sold about 50 homes in the past five weeks inside Portello.

That marks a significant improvement from the stagnant business most builders had seen in previous months.

Belfiore said the availability of inexpensive, vacant lots in otherwise developed communities is driving the recent boost in new-home sales because builders can offer prices comparable to those of bank-owned properties without suffering financial losses.

The process of designing and building a subdivision takes months and costs millions of dollars before a single home is constructed.

The community must be designed and approved by local government, and an extensive infrastructure put in place.

The developer has to clear the land of vegetation, rocks and debris, level the ground, install drains and gutters, design and pave the streets, lay cable and electrical wire, and build common areas such as parks, clubhouses and swimming pools.

A substitute home builder gets to skip all of those steps but only until the lots run out. "After that, the price of (new) homes will shoot up undoubtedly," Belfiore said.

Lenders and struggling landowners across the Valley began selling their vacant lots to builders earlier this year, and home builders are all too eager to get their hands on them, area land brokers and analysts said.

The sudden availability of inexpensive, "finished" lots has contributed to the recent surge in new-home sales, they added.

A finished lot is one for which all of the necessary infrastructure - roads, plumbing, drains, pipes and wires - are in place.

"In the southeast Valley, if you've got finished lots, you're going to move those lots," said Ryan Duncan, geographic specialist at Phoenix-based Land Advisors Organization.

Homes in those subdivisions are selling because their prices are competitive with bank-owned homes, said Larry Seay, executive vice president and chief financial officer of Scottsdale-based Meritage Homes.

Meritage, the only publicly traded home builder based in Arizona , is buying the unsold portions of stalled communities in both the East Valley and West Valley , Seay said.

Of the Valley's roughly 50,000 finished vacant lots, Seay said only a fraction are located in desirable areas and owned by a lender or struggling investors who are willing to sell for a low price.

But the good lots are too good to pass up, he said.

"It used to be maybe $80,000 (per lot), and now it's $30,000," he said, "or it used to be $60,000, and now it's $25,000."

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