Scottsdale Arizona Real Estate Blog

Apartment development is the focus of Scottsdale’s housing market, but builders based in the city say they are seeing a surge in new-home sales elsewhere in the Valley.

Builders acquired permits for nearly 2,500 single-family homes in the first quarter, up 74 percent from a year ago, said Greg Burger, publisher with RL Brown of the “Phoenix Housing Market Letter.”

Maracay Homes reports that it sold 190 homes through April, more than double its activity a year ago. Plus, this year’s $50 million in sales far exceeds last year’s pace when Maracay sold $60.5 million for all of 2011.It’s a big change for a new-home market that went from dormant to sluggish before the recent uptick.

“It hasn’t been wine and roses the past few years,” said Andy Warren,Maracay president since April 2009.

The number of building permits issued continued to grow in April and homebuilders are responding with new communities and floor plans.

Maracay Homes, with its offices at the Scottsdale Quarter, has four communities in Tucson and seven in the Valley in Buckeye, Chandler, Goodyear, Peoria and Queen Creek.

Maracay, the Arizona subsidiary of the Weyerhauser Real Estate Co., plans to open five more communities with a total of 414 home sites by the second quarter of 2013. Those developments are in Litchfield Park, Queen Creek, Gilbert, Chandler and in east Mesa at Eastmark on the former General Motors Desert Proving Ground site.

The builder has two more communities under contract with 135 home sites in Queen Creek and an additional 22 at Verrado in Buckeye.

“We’ve repositioned Maracay in the last two years to take advantage of the challenges in the economy,” said Warren, who previously worked for Weyerhauser’s Winchester Homes subsidiary in Bethesda, Md.

Maracay expects to sell 300 homes in the Valley this year and an additional 100 in Tucson, he said. The company’s average home price this year is $260,000.

Home inventory declines

A shrinking inventory of resale homes has buyers turning to new homes, and builders are responding to the demand.

The current pace of 11,000 homes this year could slow because of a tighter supply of suitable home sites and as builders limit their sales because of shortages of subcontractors, said Burger.

Buyers are getting frustrated with failed bids for a shrinking inventory of resale homes and are turning to new homes, he said, adding that the price difference of new homes costing more than resale properties is narrowing in some neighborhoods.

“We’re moving in a direction that new homes are coming into focus,” Burger said. “Some builders have opened the flood gates and are selling as many homes as they can.”

Shea Homes Arizona has seen its sales jump 40 percent so far this year over 2011.

The California-based company, with its Arizona division in Scottsdale, is averaging about eight home sales per week, up from five over the past two years.

“It’s pretty refreshing,” said Ken Peterson, Shea Homes Arizona vice president of sales and marketing.

Sales are on the upswing because consumers who lost homes to foreclosure or short sales are becoming eligible for loans, he said.

 Few new homes locally

Nearly all of the new-home subdivisions are outside of Scottsdale, which has a limited amount of large land tracts for new communities.

Scottsdale issued 63 building permits for single-family homes in the first quarter, up from 33 a year ago but far below Gilbert with 697 permits and Phoenix with 347.

Pulte Homes and Lennar each are building about 200 homes at the gated Lone Mountain community just west of Scottsdale at 60th Street and Lone Mountain Road.

Pulte spokeswoman Jacque Petroulakis said the builder has seen its traffic and sales more than double in the past few months.

Retirees, move-up families and second-home buyers are part of the sales surge, she said.

Pulte, which launched sales at Lone Mountain in April 2010, has homes of 1,933 to 3,026 square feet for $298,990 to $369,990.

Utility-cost savings are a big selling point for the new-home market, with builders touting better insulation, construction techniques, and more efficient appliances and heating and cooling systems..

Builders are also offering garages large enough for recreational vehicles and stand-alone buildings for shops, studios or guest casitas.

 New communities planned

Scottsdale-based Maracay Homes has seven Valley communities and four in Tucson. It plans to open these five communities with 414 home sites in the next two years:

Savannah in Litchfield Park, 70 homes with lots of 85 by 130 feet. Opening May 19.

Montelena in Queen Creek, 59 homes with lots of 90 by 140 feet. Opening fall 2012.

Lyons Gate in Gilbert, 46 homes with lots of 60 by 118 feet. Opening late 2012.

Vaquero Ranch in Chandler, 74 homes with lots of 60 by 120 feet. Opening second quarter 2013.

Eastmark in east Mesa, 165 homes with about half the lots at 55 by 115 feet and half the lots at 70 by 120 feet. Opening second quarter 2013.

A $65 million, 369-unit apartment complex will be built north of Scottsdale Fashion Square, despite the objection by some nearby residents who fear it will create traffic problems and decrease property values.

With a 5-1 vote, the Scottsdale City Council cleared the way for Dallas-based JLB Partners to develop the nine-building complex on the 9.6-acre parcel near the southwestern corner of Scottsdale and Chaparral roads. Portales Corporate Center is to the east, Optima Camelview Village is to the south, and single-family residences are west and north of the site.

The council approved zoning stipulation modifications, amended development standards and a new development plan for the complex. Councilman Bob Littlefield dissented, while Councilwoman Lisa Borowsky recused herself because the developer is a client of her law firm.

“An empty lot is better than a bad project,” Littlefield said. “Crowding and traffic does not equal vibrancy. It’s not economic development, it’s crowding, crowding, crowding.”

John Berry, a zoning attorney representing JLB, said the developer owns the property and the financing is in place to build the complex. He also said the complex will attract older residents who earn more than $100,000 annually, and who will bring $40 million in spending power to the area.

“It’s not the Arizona State University student … who will be renting these,” he said.

Last Friday, Camelback Park Estates resident Patty Badenock submitted a legal protest seeking a supermajority 6-1 vote of the council for approval of the project. However, JLB was able to get enough residents to rescind their support for the protest and therefore eliminate it before the meeting.

“I had 40 percent of residents within 150 feet, and you only need 20 percent,” Badenock said. “Plus, I had 65 signatures from Optima Camelview Village, and quite a few other signatures beyond the 150 feet within my own neighborhood. I believe when you do a legal protest, it should be irrevocable.”

Berry said the signatures were gathered in January and February, and that since then JLB has been addressing residents’ concerns, and many have since decided to back the project.

“Even if that legal protest had been in place tonight, we would have still won because we got three-quarters of the council tonight,” he said.

The maximum building height of the complex will be 50 feet, while both Portales Corporate Center and Optima Camelview are 65 feet. The buildings along the west side of the property nearest single-family residences will be two stories.

Primary access will be off Goldwater Boulevard and secondary access off Chaparral at 70th Place.

Bhabi Shah, a homeowner west of the site, said the complex is going to attract younger tenants who want to party, and not older, more stable tenants. Chris Layman, who also lives west of the site, said traffic congestion will be a problem, and he’s worried about the long-term impact of having a rental complex in the area.

Wayne Gillis, an Optima Camelview resident, presented a petition signed by 36 residents in support of the complex.

“We embrace urban living,” he said.

Vice Mayor Linda Milhaven, who made the motion for approval, said the project is less than what the existing zoning allowed, so there’s no reason for the council to delay it.

Average U.S. home prices — down by a third since 2006 and still falling — will rise almost 4% a year for the next five years, according to a new forecast.

Market watcher Fiserv sees prices stabilizing by summer’s end and then climbing, quickly in some places until gains taper off. The forecast is based on an analysis of leading home price indexes.

Investors will drive much of the momentum, as they are now in cities such as Las Vegas and Phoenix.

First-time and trade-up buyers will eventually follow.

Separately, market researcher CoreLogic said Tuesday that U.S. home prices rose 0.6% in March from February, the first month-over-month increase since July.

Good affordability and declining inventories are key factors.

Conventional mortgage payments now account for just 12% of median family incomes vs. a historical norm of 20%, says Fiserv economist David Stiff.

The Fiserv forecast, done with Moody’s Analytics, assumes steady economic growth with no major shocks. Markets hardest hit by foreclosures will show the biggest five-year increases in home appreciation, it adds.

Six of the 10 markets where annualized prices are expected to rise most over the next five years had price drops of more than 50% from their peaks.

Las Vegas, for instance, is 61% off its 2006 peak.

Meanwhile, Realtor.com says Florida has more cities than any other state that show the strongest signs of a housing recovery.

Each quarter, the real estate website assesses housing data, including changes in list prices, inventories of homes for sale and local economies.

Phoenix, Miami and Orlando are the top turnaround cities in its study, based on those markets’ improvements in the first quarter compared with a year earlier.

Asking prices are up more than 20% in Phoenix and Miami, says Realtor.com. Inventories are down more than 40%.

Naples, Fla., and Boise are also climbing in the rankings.

New to the list of top 25 markets are Oakland and San Jose, which are benefiting from growth in the tech industry.

The continued performance of local markets will depend a lot on the economy as well as on how quickly lenders dispose of distressed homes, says Realtor.com CEO Steve Berkowitz.

Realtor.com is owned by Move, which operates a network of real estate websites.

RED Development has added to its recent acquisitions by purchasing the Borgata of Scottsdale shopping center for $9.15 million from Macerich Co.

The Borgata at Scottsdale Road and Rose Lane is a specialty center built in 1981 to resemble the Italian village of San Gimignano. It offers 94,000 square feet of retail space, including the Blanco Tacos and J. Alexander’s restaurants and the Dolce Salon and Spa.

“We are very pleased to have acquired this well-situated and high-quality property in Scottsdale, a tremendous market for retail performance,” said Mike Ebert, RED managing partner.

RED Development, based in Phoenix, has been actively acquiring property in addition to developing CityScape in downtown Phoenix.

Last month, RED Development and Cole Real Estate Investments teamed up to buy Macerich’s 50 percent stake in the Chandler Village Center and Chandler Festival power centers for $45.8 million.

RED also bought the Shops at Prescott Gateway and the Aspen Place at the Sawmill retail center in Flagstaff within the past year.

The Borgata acquisition is part of RED’s growth strategy, Ebert said.

“We look forward to working with the unique retailers and restaurants at the property and applying RED’s creative approach to the future of the real estate,” he said.

The Borgata has vacancies, but RED Development declined to disclose its occupancy rate at the time of the sale. The deal closed earlier this week.

It did not include the nearby Shops at Hilton Village, on the opposite side of Scottsdale Road from the Borgata, which Macerich also manages. Macerich, of Santa Monica, Calif., is the parent company of Westcor, the Valley’s largest mall developer and operator. Company executives could not be reached for comment.

The tenant lineup at a beach club-anchored complex in downtown Scottsdale’s entertainment district is quickly taking shape with the addition of a neighborhood sports bar and a modern Western saloon.

Numerous conditional-use permit applications have been submitted to the city in connection with property owner Shawn Yari’s Scottsdale Retail Plaza, to be built on the block that housed Myst nightclub on Shoeman Lane and Suede restaurant and bar on Indian Plaza.

The complex should be completed by the end of the year.

Yari is seeking bar and live-entertainment permits for the Beach Club, which will include a 9,700-square-foot indoor bar and 17,600 square feet of outdoor pool and patio areas. The club will be in the center of the complex.

A three-tenant building on the eastern side will house Les Corieri’s latest venue, Munchbar, and Riot Hospitality Group’s latest, Whiskey Row. Corieri is seeking a bar permit, while Riot Hospitality Group is seeking bar and live-entertainment permits.

Les and Diane Corieri owned Myst and Suede, which will be demolished to make way for the complex. Munchbar will cater to patrons seeking a sports bar/corner bar atmosphere, said Randy Grant, who submitted the applications on Corieri’s behalf.

“It’s just very attractive to be in a redevelopment project,” Grant said. “The buildings that are there have been there 45 years and there’s some excitement to being in something new and fresh.”

Whiskey Row will be a “modern take on a country-western bar with a little Southern hospitality,” said Mike Troyan, co-owner of Riot Hospitality Group.

The group also owns El Hefe Super Macho Taqueria. The live entertainment at Whiskey Row will be a “little of everything, from dance to acoustic shows, DJs, even comedic performances,” he said.

The complex also will have a separate building with a restaurant and bar, along with retail space on the western side.

An 11-acre redevelopment site for a planned hotel and condominiums in downtown Scottsdale was sold last week at a trustee sale for $30 million.

AZ-Waters Edge LLC submitted the only bid and will take title of the land northeast of Scottsdale and Camelback roads, said attorney Lawrence Petrowski of Stinson Morrison Hecker LLP, the trustee.

Scottsdale Canal Development LLC, which started assembling the property along the Arizona Canal in 2006, had planned a 240-room Solis Scottsdale hotel and 140 condos on a site that now includes a SRP substation.

“It’s a huge disappointment,” said Mark Madkour, Scottsdale Canal Development principal. “It was a huge amount of effort, time and money.”

Madkour and his investors lost millions of dollars on what was to be a $600 million project.

IMH Financial Corp. of Scottsdale foreclosed on the property in May 2011. AZ-Waters Edge is affiliated with IMH Financial. IMH principals include venture capitalist William Meris as well as Steven Darak, Brian Peterson and James Abood.

Scottsdale Canal Development also lost ownership of a site at 68th Street and Indian School Road it had intended to use for the relocated Salt River Project substation, Madkour said. It paid $7 million for the property.

 Home sales up, prices flat

Scottsdale home sales in March were up 16.5 percent from a year ago and the median price as flat at $360,000, according to Arizona State University’s monthly housing-market report.

Sales activity was up across most of the Northeast Valley with a 41 percent increase in Paradise Valley and 52 percent in Cave Creek. But median prices dipped 6.7 percent in Fountain Hills and 15 percent in Cave Creek as well as 25 percent in Paradise Valley to $824,000.

The Valley’s median price was $134,000, up 20 percent from last March.

Scottsdale’s 592 home sales for March showed a 3.4 percent increase in average price per square foot to $178.06, according to the latest report from ASU’s Center for Real Estate Theory and Practice in the W.P. Carey School of Business.

The lower end of the housing market with prices below $250,000 has seen a steep drop in available homes, but there is a better supply at higher prices, which includes much of the Scottsdale market.

“The very low number of inexpensive homes available for resale means more buyers are considering purchasing new homes as an option,” said Mike Orr, real-estate center director. “This signals the start of a distinct upward trend in new-home sales.”

Scottsdale’s condominium and townhouse market saw a 5 percent dip in sales, but the average price jumped 11 percent to $228,093.

 State extends deadline

Westcor has again deferred its lease payment until May 31 for 112 acres of state trust land northeast of Scottsdale Road and Loop 101, according to Vanessa Hickman, deputy state land commissioner.

The Valley mall developer owed the Arizona State Land Department $2.2 million by April 30 for the site, which has long been planned for a regional mall.

Westcor made $1.26 million in lease payments through 2010 but deferred its payments in January and December 2011.

In April 2008, Westcor bid $32 million for the site to secure a 99-year lease and agreed to invest $67 million in improvements.

Westcor’s parent company is Macerich, based in Santa Moncia, Calif.

State Land Commissioner Maria Baier has the discretion to defer lease payments for up to five years.

Dirt could begin flying this month on the Mountain View Trail near 124th Street and Shea Boulevard.

The path eventually will link Stonegate Equestrian Park south of Shea with a trail in the McDowell Sonoran Preserve near the Lost Dog Wash Trailhead.

On Tuesday, the City Council is expected to approve a $727,000 construction contract with Okanogan Trail Construction to blaze most of the trail. The Cave Creek-based company also completed the Tom’s Thumb and East End trails in the preserve.

 3 segments

Mountain View Trail would be open to pedestrians, equestrians and bicyclists. It is divided into three segments, two of which could open this year.

In the vicinity are three schools — Desert Mountain High School, Mountainside Middle School and Anasazi Elementary School.

To take advantage of summer break, crews would focus initial efforts on a segment from Sahuaro Drive and 124th Street north to the trailhead, city project manager Robin Rodgers said.

“There are two schools with ingress and egress on 124th Street, and we are very much aware of the heavy traffic volumes in that area during morning and afternoon hours,” she said.

Okanogan plans to sequence its work to reduce traffic impacts and coordinate lane closures around school schedules.

To shorten construction time, crews could work simultaneously on a second segment in a residential neighborhood from Stonegate Park north to Mountain View Road, then east and north to the Central Arizona Project canal at 124th Street.

Construction is expected to last about four months.

 Middle segment delayed

Due to engineering and right-of-way challenges, Scottsdale has delayed construction on the middle segment between the canal and Sahuaro Drive.

“Because of lack of funding to construct and not knowing what the timetable would be, I felt it more appropriate to devote our resources to the two constructable areas,” Rodgers said.

The city’s Bond 2000 program earmarked about $2.3 million for trail connections, including Mountain View.

City officials are looking into other funding sources for the last segment, including grants and a bond question.

Hikers, mountain bikers and horse riders have a multitude of options to choose from to access Scottsdale’s McDowell Sonoran Preserve.

Since 2000, the city has introduced seven trailheads throughout the 21,000-acre expanse, which is home to stunning views, cacti forests and diverse wildlife in and around the McDowell Mountains.

By late 2013, the preserve could welcome an additional four trailheads, starting with the $3.3 million Tom’s Thumb Trailhead on the northern slopes of the McDowells. The Fraesfield Mountain and Granite Mountain trailheads are set to open in late 2012 or early 2013 on land north of Dynamite Boulevard. The largest of the planned trailheads, Brown’s Ranch, could debut in late 2013 a little over a mile north of the intersection of Alma School Parkway and Dynamite Boulevard.

Here is a look at Scottsdale’s existing trailheads:

Gateway Access Area

18333 N. Thompson Peak Parkway

The city’s largest trailhead, opened in 2009, has parking, restrooms and a wheelchair-accessible nature trail. The Gateway is home to the city’s most popular hike, the Gateway Loop Trail, which passes over the Gateway Saddle with views of the McDowell Mountains and surrounding desert.

Lost Dog Wash Trailhead

12178 N. 124th St.

The city’s first major trailhead boasts a building and parking area designed to blend in with the surrounding desert. Hikers can connect to the nearby Sunrise, Ringtail and Taliesin trails.

The Sunrise Trailhead

12101 N. 145th Way

This minor access point into the preserve opened in 2005 as a symbol of the work accomplished since voters approved the preserve’s creation in 1995.

WestWorld Trailhead

 5939 N. 98th St.

This trailhead, which connects to the preserve via the WestWorld trail to the Quartz or Taliesin trails, has horse-trailer parking, a ramada and restrooms.

Quartz Trailhead

10215 E. McDowell Mountain Ranch Road

Located southwest of McDowell Mountain Ranch Road and 104th Street, the access point with limited amenities connects to the preserve via the Quartz Trail.

Ringtail Trailhead

12300 block of North 128th Street

The trailhead has parking in an undeveloped area on west side of 128th Street North of Cactus Road.

104th/Bell Road Trailhead

This small trailhead has limited amenities North of Bell Road at 104th Street.

Tom’s Thumb Trailhead

128th Street South of Rio Verde Drive

Temporary parking exists at the site before the formal trailhead debuts later this year. It will have paved parking and access the existing Tom’s Thumb Trail and future Marcus Landslide Trail.